Lex Rex Ph

Capital Gains Tax

Capital Gains Tax meaning is the final tax assessed on the presumed gain derived by citizens and resident aliens, as well as estates and trusts, from the sale of or exchange of real property.1

Only natural persons or individuals are liable to the final capital gains tax but corporations are liable for ordinary income tax under Section 24(a) of the Tax Code.2

Capital Gains Tax on Corporations (Chapter IV, Section 27 of 1997 NIRC) – Capital Gains from the sale of lands or buildings: Final tax of 6% on the gain from properties not used as a business, but are treated as capital assets, based on gross selling price or fair market value (determined based on Section 6(e) of 1997 NIRC) whichever is higher. The gains from the sale should be included in a corporation’s return (Income Tax Return) pursuant to Sections 24(a) and 45 of 1997 NIRC.3

1Section 24(d) of the National Internal Revenue Code of 1997; “Tax Law and Jurisprudence,” Justice Jose C. Vitug and Judge Ernesto D. Acosta, 2nd ed., Manila, Philippines, p. 74.; Section 24(d) was previously Section 34(h) of the 1977 NIRC as amended by BP 37)

2BIR Ruling No. 159 (Sept 1985); VILE v. CA and Genuino Inc.


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