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RMO No. 33-2023: Reiterates Section 3.J of RR No. 17-2003 on the withholding of taxes for the sale of real property on installment plan

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Summary

RMO No. 33-2023 reiterates Section 3.J of RR No. 17-2003 on withholding taxes for sales of real property on installment plan where payments in the year of sale do not exceed twenty-five percent (25%) of the selling price.

Key points

  1. Buyer is an individual not in business. No withholding is made on the periodic installments. The applicable tax rate on the gross selling price or fair market value at the time of the contract to sell, whichever is higher, is withheld on the last installment, or on earlier installments if the last is not enough, until the tax is fully paid.
  2. Buyer is engaged in trade or business. The buyer withholds tax from every installment, based on the ratio of actual collection to the agreed consideration in the Contract to Sell. The ratio is applied to the gross selling price or fair market value at the time of the contract, whichever is higher.
  3. Consideration and interest. Consideration means the selling price exclusive of interest. Interest earned as an incident of installment payment is subject to the ordinary income tax rate.
  4. CAR and TCL. No Certificate Authorizing Registration or Tax Clearance Certificate is issued to the buyer until the withholding tax on the sale, transfer or exchange of real property is fully paid.
  5. Sanctions. Non-compliance subjects the revenue officer or employee to administrative sanctions for inefficiency and incompetence under Sections 11, 14 and 16 of the Revised Code of Conduct for Revenue Officials and Employees and Civil Service Rules.

Who is affected

  • Buyers of real property classified as ordinary asset on installment plan
  • Sellers of such real property
  • Revenue officers and employees

Deadlines and effectivity

  • Installment plan: payments in the year of sale do not exceed 25% of the selling price

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

Related issuances

CitesRR No. 17-2003

Copies of BIR issuances are hosted here for reference. For the official version, check bir.gov.ph. Summaries by Tax Resources PH are not a substitute for the full text or professional advice.