CGT

CAPITAL GAINS TAX (CGT)
■Income (gains) from sale of Capital Assets are subject to CGT,

specifically from
 Sale of Shares of Stocks of Domestic Corporation not traded or

unlisted in the local stock exchange; and
 Sale of Real Properties located WITHIN the Philippines.
Capital Asset vs. Ordinary Asset
Under the Tax Code, the following are
■ ORDINARY ASSET:
 Stock in Trade or other property included as inventory on hand at

the end of the year.
 Property used in trade or business subject to depreciation.
 Real Property held for sale to customers in ordinary course of
trade or business.
 Real property used in trade or business of the taxpayer.
■ CAPITAL ASSET: All other property held by the taxpayer
 Not included in the definition of ordinary asset above.

 Assets not used in business including personal assets.
TAXATION FOR CAPITAL GAINS
■ CAPITAL GAINS TAX- Capital Gains subject to CGT.
■PERCENTAGE TAX- Capital Gains subject to Percentage Tax (PT).
■ BASIC INCOME TAX- Capital Gains not subject to CGT and PT.
CAPITAL GAINS (CG) subject to CG TAX
■A. Capital Gain on Sales of Share of Stocks, untraded, unlisted.
 Stocks of a Domestic Corporation

 Direct Sale
 There should be a Capital Gain
 Selling Price (SP) – Cost (C) = Capital Gain (CG) x 15%= CGT
■B. Sale of Real Properties classified as capital asset.

Located in the Philippines
Regardless the transaction resulted to a capital gain or loss.
If sold to the government(inc. GOCCs, other instrumentalities), Individual

Taxpayer may choose to be taxed with CGT or Graduated Income tax.
Tax Base x CGT rate 6% Capital Gains Tax (CGT)
Tax Base is the Higher of:
1. Selling Price; or
2. Fair Market Value
-Fair Market Value is
The Higher of FMV per Assessor or BIR Zonal Value.
RPVAR Act
 On 13 June 2024, President Ferdinand R. Marcos, Jr. signed

Republic Act No. 12001
 Real Property Valuation and Assessment Reform Act (RPVARA)
 An Act Instituting Reforms in Real Property Valuation and
Assessment in the Philippines, Reorganizing the Bureau of Local
Government Finance Granting of Tax Amnesty on Real Property
and Special Levies on Real Property, and Appropriating Funds
Therefor
What the RPVARA intends to solve:
1. Outdated valuations used for governmental purposes.Especially

for national and local taxation; LGUs comingle valuation with
taxation.
2. Multiple valuations resulting in wide disparities in values: there
are as many values as there are valuing agencies
3. No single agency responsible for ensuring that valuations/
revaluations are completed in accordance with standards
4. Absence of a comprehensive real property electronic database to
capture transactions and support regular property re-valuations
RPVARA Aims to:
SMV - SCHEDULE OF MARKET VALUES

 Establish and maintain standards on valuation.
RPIS - REAL PROPERTY INFORMATION SYSTEM
 DUTY OF ROD TO SUPPLY ASSESSORS OF REAL PROPERTY

TRANSACTION DATA; BLGF
SINGLE VALUATION
-revision of assessment or
reclassificaiton
-Market value for RPT
-For National Internal Revenue Taxes
Implementing rules and regulations- 3 months after the effectivity.
Assessors shall update its Schedule of Market Values within 2 years from
effectivity of the law.
RPT Amnesty on:
-Penalties, Surcharges, Interest on RPT and SEF/ILT;
-Other Special Levy Taxes on RP
may be availed within 2 years from effectivity of the law.
Sale of Listed or Traded Stocks
■ Subject to PERCENTAGE TAX
Stock Transaction Tax
Tax Base:
Gross Selling Price
Tax Rate:
6/10 of 1%
Sale of Capital Assets Subject to Basic Tax
■ Use Only Graduated Tax Rate
Gain on Sale of Stocks of Foreign Corp. Not Traded.
Sale of Real Properties situated abroad.
Gain on Sale of Personal Use Vehicle
Gain on Sale of Personal Use Jewelry
Other Capital Gains not listed as subject to PT and CGT.
Sale of Principal Residence
■ Generally Subject to 6% CGT.
■Exempt if when the proceeds of the sale are FULLY utilized in acquiring
or constructing a new principal residence.
Within 18 Months from the date of sale.
If partially used
Taxable Amount = (Unutilized Proceeds/Gross Selling Price) x Tax Base

The historical cost or adjusted basis shall be part of the new residence.
The BIR is notified through a prescribed return for intent to avail

exemption within 30 days from the sale of principal residence.
Note: Exemption can only be availed of once every 10 Years.
Withholding Taxes on Individual Income Taxes
Withholding taxes are amounts deducted from an individual’s or entity’s

income at the source, typically by an employer, buyer, or a financial
institution, before the income is paid out.
Final withholding taxes (Withholding of Final Tax on Certain Incomes) are

amounts that are deducted from certain types of income and are
considered the final settlement of the tax liability for that income.
Creditable withholding taxes (Withholding of Creditable Tax at Source)

refer to amounts withheld from payments that can be credited against a
taxpayer’s overall tax liability. This means that the taxes deducted at the
source can be used as a prepayment of th taxpayer’s income tax when
they file their annual tax return
Purpose of Withholding Taxes
Is to ensure that tax obligations are met and to facilitate government

revenue collection.
Reportorial Compliance
■ Annual Income Tax Returns
Deadline of Filing and Payment:
15th Day of the 4th month after the close of the Tax Year.
■Calendar Year: April 15, 20XX
■ Quarterly Income Tax Returns
Deadline of Filing and Payment:
45 days after the end of the Quarter.
First Quarter: May 15, 20XX
Second Quarter: August 15, 20XX
Third Quarter: November 15, 20XX

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CAPITAL GAINS TAX (CGT)

■Income (gains) from sale of Capital Assets are subject to CGT,

 Sale of Shares of Stocks of Domestic Corporation not traded or

Capital Asset vs. Ordinary Asset

Under the Tax Code, the following are

 Stock in Trade or other property included as inventory on hand at

■ CAPITAL ASSET: All other property held by the taxpayer

 Not included in the definition of ordinary asset above.

TAXATION FOR CAPITAL GAINS

■ CAPITAL GAINS TAX- Capital Gains subject to CGT.

■PERCENTAGE TAX- Capital Gains subject to Percentage Tax (PT).

CAPITAL GAINS (CG) subject to CG TAX

■A. Capital Gain on Sales of Share of Stocks, untraded, unlisted.

 Stocks of a Domestic Corporation

■B. Sale of Real Properties classified as capital asset.

Regardless the transaction resulted to a capital gain or loss.

If sold to the government(inc. GOCCs, other instrumentalities), Individual

Tax Base x CGT rate 6% Capital Gains Tax (CGT)

Tax Base is the Higher of:

-Fair Market Value is

The Higher of FMV per Assessor or BIR Zonal Value.

 On 13 June 2024, President Ferdinand R. Marcos, Jr. signed

What the RPVARA intends to solve:

1. Outdated valuations used for governmental purposes.Especially

RPVARA Aims to:

SMV - SCHEDULE OF MARKET VALUES

RPIS - REAL PROPERTY INFORMATION SYSTEM

 DUTY OF ROD TO SUPPLY ASSESSORS OF REAL PROPERTY

-Market value for RPT

-For National Internal Revenue Taxes

Implementing rules and regulations- 3 months after the effectivity.

RPT Amnesty on:

-Penalties, Surcharges, Interest on RPT and SEF/ILT;

-Other Special Levy Taxes on RP

may be availed within 2 years from effectivity of the law.

Sale of Listed or Traded Stocks

■ Subject to PERCENTAGE TAX

Stock Transaction Tax

Gross Selling Price

Sale of Capital Assets Subject to Basic Tax

■ Use Only Graduated Tax Rate

Gain on Sale of Stocks of Foreign Corp. Not Traded.

Sale of Real Properties situated abroad.

Gain on Sale of Personal Use Vehicle

Gain on Sale of Personal Use Jewelry

Other Capital Gains not listed as subject to PT and CGT.

Sale of Principal Residence

■ Generally Subject to 6% CGT.

Within 18 Months from the date of sale.

Taxable Amount = (Unutilized Proceeds/Gross Selling Price) x Tax Base

The BIR is notified through a prescribed return for intent to avail

Note: Exemption can only be availed of once every 10 Years.

Withholding Taxes on Individual Income Taxes

Withholding taxes are amounts deducted from an individual’s or entity’s

Final withholding taxes (Withholding of Final Tax on Certain Incomes) are

Creditable withholding taxes (Withholding of Creditable Tax at Source)

Purpose of Withholding Taxes

Is to ensure that tax obligations are met and to facilitate government

Deadline of Filing and Payment:

■Calendar Year: April 15, 20XX