RMC No. 40-2012: Prescribes a period of prescription for Rulings under Section 40(C)(2) of the National Internal Revenue Code of 1997, as amended

Summary

RMC No. 40-2012 prescribes a period of prescription for rulings under Section 40(C)(2) of the NIRC, as amended. Such rulings are valid only for 90 days from receipt.

Key points

1. 90-day validity. The ruling is valid for 90 days counted from receipt by any party to the exchange transaction. The properties and shares of stock must be conveyed to the transferees and transferors, respectively, within this period.
2. Documents to submit. Under RR No. 18-2001 and RMO No. 32-01, a photocopy of the TCT/CCT/Share of Stock bearing the annotation of substituted basis, certified by the Register of Deeds/Corporate Secretary, goes to the Law Division, BIR, 7/F National Office Building, Diliman, Quezon City. This is also due within 90 days from receipt of the ruling or certification by any party.
3. If not submitted. The ruling becomes void and without effect. The Chief, Law Division refers the docket of the case to the Prosecution Division for appropriate action.
4. Penalties. Violations by any party to the exchange or by any public officer or employee are subject to penalties under Sections 269 and 275 of the NIRC, as amended, as implemented by RR No. 18-2001 and RMO No. 32-01.
5. Revenue District Offices. Unless the Commissioner grants an extension in meritorious cases, Revenue District Offices must not honor such rulings beyond 90 days counted from receipt by any party to the exchange.

Who is affected

• Parties to exchange transactions under Section 40(C)(2)
• Revenue District Offices
• Public officers and employees

Deadlines and effectivity

• Ruling valid for 90 days from receipt
• Certified title or share documents due within 90 days from receipt of the ruling or certification

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.