Outgoing Bureau of Internal Revenue (BIR) chief Kim Henares recently issued Revenue Memorandum Order (RMO) 24-2016, bearing the subject ‘Prescribing the Investigation of Parties in Transactions Involving the Transfer/Assignment/Sale Properties.’ This new BIR memo was issued this Tuesday, June 7, 2016, and shall take effect immediately.
As mentioned in its Guidelines and Procedure, the purpose of the RMO is to make sure that the parties involved in the transfer or sale of real properties really have the capacity to buy or sell those properties, and are capable of paying the taxes as required by law. In short, additional documents shall be submitted before the transaction is completed.
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According to memo by Henares, one of the documents that may require evaluation and investigation is the Certificate Authorizing Registrations (CARs) and Tax Clearance (TCLs). A One-Time Transaction Team (ONETT) shall be assigned for all the additional procedures, and will provide recommendations once an incapacity has been determined.
To avail a tax-free transaction, the concerned taxpayers submit all supporting documents required under existing rules and regulations in quadrupiicate to the Law Division of the BIR National Office. In case further investigation is required, the Law Division shall forward the case to the National Investigation Division (NID).
But before the NID could make any action, it shall submit a memorandum request directly to the OCIR (Office of the Commissioner). The request shall include all the necessary details of the tax-free transaction, such as tax compliance history of both parties. However, the sitting BIR chief may still request for additional documents.
While we at TN understand that its purpose is that the required tax shall be collected, we think that the additional processes could be used by corrupt BIR officials to extort money from buyers and sellers. Recently, incoming President Rodrigo Duterte dubbed BIR as one of the three most corrupt government agencies, and plans to overhaul it.
But besides the fact that this new BIR rule also requires longer time in transactions that can cause delay and additional burden to land owners and buyers, we want to ask BIR chief Kim Henares, why only now?. We all know that the Aquino administration will officially end this coming June 30, and that she said she plans to return to private life.