Quezon City Vs. BIR... FIGHT!

The Quezon City local government is in a tiff with the Bureau of Internal Revenue (BIR) over P400M worth of taxes.  Former actor Herbert Bautista, the current occupant of the QC mayoralty chair, has asked the help of the Department of Finance's Secretary Cesar Purisima in an apparent bid to get the local government of Quezon City exempted from paying the Capital Gains Tax (CGT) and Documentary Stamp Tax (DST) on properties it foreclosed for non-payment of real estate property taxes, or "amilyar" as known by Filipinos.  This developed after the BIR's Commissioner, Kim S. Jacinto-Henares, refused to let the local government off from paying capital gains and documentary stamp taxes on said properties.  BIR Commissioner Henares stands by Section 39 of the Tax Code (Republic Act 8424) which states that "capital gains tax is presumed to have been realized from the sale, exchange or other disposition of real property."  City Administrator Vic Endriga, however, countered that Quezon City did not realize any gains from confiscating the tax delinquent properties.  Instead, he argues that the city will actually be spending more to develop said properties into low-cost housing units for the poor residents of the city.

In this case, the QC local government is acting as the statutory seller in lieu of the owners of the confiscated properties.  I was not able to find any mention in the Real Property Tax Code (Presidential Decree 464) of any exemption for statutory sellers.  I say, pay up QC local government, since you paid yourselves, the Philippines deserves to get a slice of the pie, so to speak.


Death and Taxes,
Jon