In the Philippine legal and fiscal landscape, the transfer of real property and shares of stock not traded through a local exchange is governed by a stringent set of administrative procedures. Central to this process is the One-Time Transaction (ONETT) system of the Bureau of Internal Revenue (BIR). While often used interchangeably in casual conversation, "ONETT" and "Capital Gains Tax (CGT) Filing" represent distinct concepts: one is the administrative framework, while the other is the specific tax obligation.
Understanding the interplay between these two is vital for legal practitioners, real estate professionals, and taxpayers to ensure the validity of a transfer and the eventual issuance of a Certificate Authorizing Registration (CAR).
I. Defining the Scope: ONETT vs. Capital Gains Tax
To appreciate the procedure, one must first distinguish the mechanism from the liability.
- One-Time Transaction (ONETT): This refers to the BIR's specialized processing track for transactions that do not occur in the ordinary course of a taxpayer's trade or business. It covers Capital Gains Tax (CGT), Expanded Withholding Tax (EWT), Donor’s Tax, Estate Tax, and Documentary Stamp Tax (DST).
- Capital Gains Tax (CGT): This is a tax imposed on the gains presumed to have been realized by the seller from the sale, exchange, or other disposition of "capital assets" located in the Philippines.
The Distinction of Assets
The applicability of CGT—and by extension, the ONETT procedure—hinges on whether the property is a Capital Asset or an Ordinary Asset.
- Ordinary Assets: Properties used in business (inventory, depreciable assets). These are subject to Creditable Withholding Tax (CWT) and Income Tax, not CGT.
- Capital Assets: Properties not used in trade or business (e.g., a residential home or a private investment). These are strictly subject to CGT.
II. The Capital Gains Tax (CGT) Framework
The National Internal Revenue Code (NIRC), as amended by the TRAIN Law, dictates the rates and deadlines for CGT.
| Asset Type | Tax Rate | Deadline |
|---|---|---|
| Real Property (Land/Buildings) | 6% of the Gross Selling Price or Fair Market Value (whichever is higher) | Within 30 days following each sale or disposition. |
| Shares of Stock (Not Traded) | 15% of the net capital gains | Within 30 days after each sale/disposition; Annual return due on or before the 15th day of the 4th month following the close of the taxable year. |
Note: For real property, the Fair Market Value is the higher value between the Zonal Value (set by the BIR) and the Assessed Value (set by the Provincial/City Assessor).
III. The ONETT Procedural Roadmap
The ONETT process is the "gauntlet" a taxpayer must run to prove tax compliance so that the Title (Transfer Certificate of Title) can be legally transferred at the Register of Deeds.
1. Venue of Filing
The transaction must be processed at the Revenue District Office (RDO) having jurisdiction over the location of the property. In the case of shares of stock, it is the RDO where the seller is registered.
2. Mandatory Documentation
The BIR requires a "Checklist of Documentary Requirements" (BIR Form 1904). Standard requirements include:
- Original and photocopy of the notarized Deed of Absolute Sale (DOAS).
- Certified True Copy of the Transfer Certificate of Title (TCT/CCT).
- Certified True Copy of the latest Tax Declaration (Land and Improvement).
- BIR Form 1706 (for CGT) and BIR Form 2000-OT (for DST).
- Vicinity Map and/or Tax Clearance from the Local Government Unit.
3. Tax Calculation and Payment
Under the ONETT system, the taxpayer computes the CGT and DST. Payment is made through Authorized Agent Banks (AABs) within the jurisdiction of the RDO. Electronic filing via eBPS or eBIRForms is now standard.
4. The Issuance of the CAR
The "Holy Grail" of the ONETT process is the Certificate Authorizing Registration (CAR). No Register of Deeds in the Philippines will transfer the ownership of real property or shares of stock without a valid, barcoded CAR issued by the BIR. This document serves as proof that all taxes related to the "one-time" transfer have been fully liquidated.
IV. Comparative Procedural Nuances
While the ONETT system provides a centralized process, the filing requirements differ based on the nature of the transaction.
- CGT vs. EWT Transactions: If the seller is a real estate developer (Ordinary Asset), the transaction still goes through the ONETT office, but the taxpayer files BIR Form 1606 (Withholding Tax) instead of 1706 (CGT).
- DST Requirements: Regardless of whether the tax is CGT or EWT, Documentary Stamp Tax (DST) is an inseparable companion. For real property, the rate is generally 1.5% of the value. Failure to file DST concurrently with CGT often leads to significant surcharges.
V. Common Pitfalls and Legal Consequences
Late Filing and Surcharges
The 30-day window for CGT is jurisdictional. Missing this deadline triggers:
- Surcharge: 25% of the tax due (50% in cases of fraud).
- Interest: 12% per annum (under the TRAIN Law).
- Compromise Penalty: Based on a schedule provided by the BIR.
The "Principal Residence" Exemption
Under Section 24(D)(2) of the NIRC, an individual may be exempt from the 6% CGT if the sale involves their principal residence, provided the proceeds are used to acquire a new residence within 18 months. However, this exemption is not automatic; it must be processed through the ONETT system with a specialized escrow agreement, and it can only be used once every ten years.
VI. Conclusion
The intersection of ONETT procedures and Capital Gains Tax filing is where the state’s power of taxation meets the individual's right to property. For a transfer to be legally complete in the Philippines, mere payment between buyer and seller is insufficient. The rigorous ONETT process ensures that the government receives its share of the "unearned increment" of property value through CGT, validated by the issuance of the CAR. Precision in documentation and strict adherence to the 30-day filing window remain the best defenses against the accrual of onerous penalties.