RMO No. 25-2016: Supplements the rules on the investigation of parties in transactions involving transfer/assignment/sale of properties

Key points

1. Presumption of undeclared income. This applies when the seller, transferor or assignor is a corporation or a stranger to the buyer, and the buyer is proven to have no financial capacity to purchase the property. The buyer is then presumed to have earned income it did not declare, with taxes on it unpaid.
2. Income tax assessment. In addition to tax due on the sale, transfer or assignment, Income Taxes are assessed against the buyer on the consideration it cannot show financial capacity for. The assessment is for the taxable year of the transaction.

Who is affected

• Buyers, transferees or assignees without proven financial capacity, where the seller is a corporation or a stranger

Deadlines and effectivity

• Assessed for the taxable year when the sale, transfer or assignment occurred