[Ask the Tax Whiz] Clarifying some tax issues related to ONETT transactions

ONETT refers to transactions that are subject to one-time tax compliance and processing with the BIR One-Time Transactions (ONETT) include the sale of real property, transfer of shares, donations, and estate property transfers, all requiring tax compliance and BIR documentation. The BIR can issue the Electronic Certificate Authorizing Registration (eCAR) even if the Value-Added Tax (VAT) is unpaid, but this does not absolve the taxpayer of their VAT obligations. Tax classification for properties is based on the Tax Declaration rather than actual use, affecting the applicable taxes such as Capital Gains Tax and Documentary Stamp Tax. This is AI-generated. Read the article for full context. Report any errors. The Philippine Tax Whiz answers common questions on ONETT transactions and explains key tax issues clarified by the Bureau of Internal Revenue (BIR) under Revenue Memorandum Circular No. 75-2026. What transactions are classified as One-Time Transactions (ONETT)? ONETT refers to transactions that are subject to one-time tax compliance and processing with the BIR. These include the following: Sale of real property classified as a capital asset; Sale, transfer, or assignment of shares of stock not traded through the stock exchange; Sale of real property classified as an ordinary asset; Donation of property; and Transfer of properties arising from a decedent’s estate. Taxpayers undertaking any of these transactions are generally required to comply with the applicable documentary requirements, pay the corresponding taxes, and secure the necessary BIR-issued documents, such as the Electronic Certificate Authorizing Registration (eCAR), before the property or shares can be validly transferred or registered. Can the BIR issue the eCAR even if the Value-Added Tax (VAT) has not yet been paid? Yes. The BIR may still issue the eCAR even if the VAT due on the transaction has not yet been paid. However, the issuance of the eCAR does not extinguish the taxpayer’s obligation to pay the applicable VAT. The concerned office issuing the eCAR shall inform the Revenue District Office (RDO) for the appropriate assessment and collection of the VAT due, if applicable. Accordingly, taxpayers should not interpret the issuance of the eCAR as confirmation that all tax liabilities arising from the transaction have been fully settled. Any unpaid VAT remains subject to assessment and collection by the concerned RDO. In case the seller and buyer agreed that the buyer shall assume the payment of Capital Gains Tax (CGT) instead of the seller, should the amount of CGT be included/added in the selling price for purposes of determining the tax base of the CGT? No. The computation shall be whichever is highest of the following amounts: Selling Price (as shown on Deed of Absolute Sale or DOAS, excluding Capital Gains Tax) Fair Market Value (FMV) or Zonal Value determined by the BIR commissioner FMV by the Provincial or City Assessor until amended by the Real Property Valuation and Assessment Reform Act (RPVARA), where it is based on Schedule of Market Value (SMV) or actual gross selling price, whichever is higher. The Documentary Stamp Tax (DST) shall likewise be computed the same as the basis of CGT, except in government transactions, where DST is based on the consideration paid. Is a dacion en pago considered a sale or transfer of property subject to tax? Yes. A dacion en pago is considered a transfer of ownership where a debtor conveys property to a creditor as settlement of an existing obligation. Although the transaction is intended to settle a debt, it is treated as a transfer of property for tax purposes. The applicable taxes depend on the classification of the property transferred: If the property is classified as a capital asset: Capital Gains Tax (CGT) Documentary Stamp Tax (DST) If the property is classified as an ordinary asset: Creditable Withholding Tax (CWT) Value-Added Tax (VAT), if applicable Documentary Stamp Tax (DST) Is the actual use of the property the basis for determining its tax classification? No. For purposes of computing the applicable taxes, the classification indicated in the Tax Declaration shall be the basis, and not merely the actual use of the property. For instance, a property may be currently used as a small bake shop or other commercial establishment; however, if the Tax Declaration classifies the property as residential, such classification shall be considered in determining the applicable tax treatment. Similarly, a property with an area of less than 1,000 square meters that is classified as agricultural in the Tax Declaration shall not be automatically considered residential solely because of its size. The classification reflected in the Tax Declaration shall prevail in determining the applicable tax treatment. – Rappler.com Mon Abrea is a Global Tax Policy Expert and Chief Tax Advisor of the Asian Consulting Group (ACG), the Philippines’ premier tax advisory and investment consulting firm—providing tax strategy, compliance, and policy advisory services to multinational corporations, foreign investors, and government institutions. For strategic tax advisory, CONSULT ACG, or you may also send an email to consult@acg.ph to host investment and tax briefing in key cities across Asia, Middle East, Oceania, Europe and North America. Below are some of Abrea’s tax advice columns you may have missed: How does this make you feel? Loading