PHILIPPINE LAWS, STATUTES AND CODES (2024)

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Section 1.Sec. 34 of the National Internal Revenue Code of 1977, as amended,is hereby further amended by adding thereto paragraph (h) to read asfollows:

"(h) Theprovisions of paragraph (b) of this Section to the contrarynotwithstanding, net capital gains from the sale or other dispositionof real property by citizens of the Philippines or resident alienindividuals shall be subject to the final income tax rates prescribedas follows:

NET CAPITAL GAINS RATES

On the first P100,000 or less 10%

On any amount over P100,000 20%

such tax shall be in lieu of the tax imposed under Sec. 21 of thisCode: Provided, however, That the tax liability, if any, on gains fromsales or other dispositions of real property to the government or anyof its political subdivisions or agencies or to government-owned orcontrolled corporations shall be determined either under Sec. 21hereof or under this Section , at the option of the taxpayer, Provided,further, That if the taxpayer elects to report such gains in accordancewith the provisions of Sec. 43(b), the amount of the tax which shallbe paid on each installment shall be the proportion of the tax hereinimposed, which the installment payment received bears to the totalselling price; Provided, finally, That failure on the part of theseller to pay the tax imposed herein on any gains returnable under theinstallment method will automatically disqualify the seller-taxpayerfrom paying the tax in installments and the unpaid portion of the taxshall immediately be due and demandable. The tax herein imposed shallbe returned and paid in accordance with Sec. 45(c) and 51(a) (4) ofthis Code.

Sec. 3. Paragraph (c) of Sec. 45, as amended bythe preceding Section , is hereby further amended by adding thereto anew Subparagraph (3) to read as follows:

Sec. 4. Sec. 5(a) of the National InternalRevenue Code of 1977, as amended is hereby further amended by addingthereto a new Subparagraph (4), prescribing the manner of payment ofthe tax imposed on capital gains to read as follows:

"(4) Payment ofCapital Gains Tax. — The total amount of tax imposed under Sec. 34(g) and (h) shall be paid on the date the return prescribed thereforis filed by the person liable thereto: Provided, however, That if theseller submits proof of his intention to avail himself of the benefitof exemption of capital gains under existing special laws, no suchpayment shall be required; Provided, further, That in case of failureto qualify for exemption under such special laws and implementingrules, the tax due on the gains realized from the original transactionshall immediately become due and payable, and subject to the penaltiesprescribed under applicable provisions of this Code; and Provided,finally, That if the seller, having paid the tax, submits such proof ofintent within six months from the registration of the documenttransferring real property, he shall be entitled to a refund of suchtax upon verification of his compliance with the requirements for suchexemption.

"In case the person elects and is qualified to report the gain byinstallments under Sec. 43 of this Code, the tax due from eachinstallment payment shall be paid within thirty (30) days from thereceipt of such payments."

Sec. 5. Sec. 72 of the National InternalRevenue Code is hereby amended to read as follows:

"(a) In case ofany failure to make and file a return or list within the timeprescribed by law or by the Commissioner or other internal revenueofficer, not due to willful neglect, except that, when a return isvoluntarily and without notice from the Commissioner or other officerfiled after such time, and it is shown that the failure to file it wasdue to a reasonable cause, no such addition shall be made to the tax;

"(b) In case the return is filed with a person otherthan that mentioned in Section s 45(b) and 86 of this Code; and

"(c) In case the tax imposed under Sec. 34(h) oncapital gains realized from a deferred-payment sale where the vendorretained title to the property, or on gains on any installmentpayments, is not paid within the time prescribed in Sec. 51(a) (4)of this Code.

"The amount so added to any tax shall be collected at the same time inthe same manner and as part of the tax unless the tax has been paidbefore the discovery of the neglect, falsity, or fraud, in which casethe amount so added shall be collected in the same manner as the tax."

Sec. 8. This Act shall take effect upon itsapproval.

Approved: September 7, 1979.

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