Overview of Certificate Authorizing Registration in the Philippines

By: Garry S. Pagaspas

Certificate Authorizing Registration (CAR) in the Philippines is one issued by the Bureau of Internal Revenue (BIR) in relation to transfers of certain properties in the Philippines. Hereunder are some of its features for easy reference.

A mandatory tax clearance  for the transfer of title

Certificate authorizing registration (CAR) in the Philippines is in effect a tax clearance issued by the Bureau of Internal Revenue (BIR) relative to the transfer of certain properties. Once issued, it would mean that applicable taxes on such transfers of properties are being paid – capital gains tax in the Philippines, documentary stamp tax in the Philippines, creditable withholding tax in the Philippines,  and certification fees, whichever is applicable.

It is a mandatory requirement and the title of the property will not be transferred in the absence of such CAR. Requirement for certificate authorizing registration on real properties (e.g. land and condominium units) is imposed under Section 58(E) of the Philippine Tax Code, as amended. For the Registry of Deeds, it will not issue a new transfer certificate of title (TCT) or condominium certificate of title (CCT) in the name of the buyer in the absence of the CAR.

With respect to the certificate authorizing registration on shares of stock, it is the BIR regulation that imposes the same. The Corporate Secretary of a stock corporation in the Philippines will not issue a new stock certificates in the name of the buyer in the absence of the certificate authorizing registration from the BIR.

Applies to specific transfers of properties only

Not all property transfers are required certificate authorizing registration in the Philippines. It only applies to the following properties:

• Real properties covered by transfer certificate of title (TCT);
• Condominiums covered by condominium certificate of title (CCT);
• Shares of stock of a domestic stock corporation in the Philippines

CAR application requirements and process

As to requirements for securing certificate authorizing registration (CAR) in the Philippines, it would depend on type of property – land, condominium unit, shares of stock. For land and condominium, it would depend on whether the same is a capital asset or ordinary asset of the seller. The complete list is available with the BIR One Time Transactions (ONETT). Hereunder are some major requirements:

Sale of shares of stock:

• Capital gains tax return
• BIR Form No. 2000 – ONETT – Documentary Stamp Tax Return
• Certification fee of P100
• Legal document of transfer – e.g. Deed of Assignment
• Copy of the Stock Certificate to be transferred
• Copy of latest audited financial statements
• Copy of the latest General Information Sheet
• Copy of the articles of incorporation and by-laws of the corporation
• Copies of the documents on the previous acquisition of such shares of stock

Sale of real property:

• Capital gains tax return, if applicable
• BIR Form No. 2000 – ONETT – Documentary Stamp Tax Return
• Proof of withholding, if ordinary asset
• Legal document of transfer – e.g. Deed of Assignment or Deed of Absolute Sale
• Certification fee of P100
• Copy of the transfer certificate of title (TCT) or condominium certificate of title (CCT)
• Copy of the latest tax declaration
• Sketch of property location
• Copies of the documents on the previous acquisition of such property

Based on the above documents, the BIR revenue officers will process the CAR application and upon finding the same in order, the certificate authorizing registration (CAR) in the Philippines will be released within approximately a week or two. I suggest you closely monitor the progress of the application and make a follow-up from time to time while the application is pending. Upon the release of the certificate authorizing registration, you can now proceed with the Registry of Deeds for the transfer of title of real properties or with the Corporate Secretary for the issuance of new stock certificates.

Penalties for failure to secure certificate authorizing registration

Penalties in relation to certificate authorizing registration will be imposed by the BIR upon the late filing and payment of the related taxes – capital gains tax in the Philippines, withholding taxes in the Philippines, documentary stamp tax in the Philippines. The usual 25% one-time surcharge (50% if fraudulent), 20% interest, and compromise penalties based on the  basic amount ranging from P200 to P50,000. Corporate Secretary who will transfer a shares of stock and issue a new Stock Certificate without the certificate authorizing registration is also exposed to liability.

(Garry S. Pagaspas is a Resource Speaker with Tax and Accounting Center, Inc. He is a Certified Public Accountant and a degree holder in Bachelor of Laws engaged in active tax practice for more than seven (7) years now and a professor of taxation for more than four (4) years now. He had assisted various taxpayers in ensuring tax compliance and tax management resulting to tax savings rendering tax studies, opinions, consultancies and other related services. For comments, you may please send mail at ga************@ta************.org.)

Disclaimer: This article is for general conceptual guidance only and is not a substitute for an expert opinion. Please consult your preferred tax and/or legal consultant for the specific details applicable to your circumstances.

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