Overview

When a Philippine real property is sold, the transaction must be presented to the Bureau of Internal Revenue (BIR) for ONETT (One-Time Transactions) processing. The BIR issues an Electronic Certificate Authorizing Registration (eCAR) only after all applicable taxes are paid and documentary requirements are met. If you file or pay late, statutory additions to tax attach automatically, and the eCAR will not be released until all liabilities are settled.

This article explains what must be filed, deadlines, what “late” means, the penalties (surcharge, interest, compromise), and practical steps to cure late registration, with worked examples.

What must be filed for a typical sale

Depending on the seller’s tax profile and the property’s classification, one or more of the following apply:

Income-side tax
- Capital Gains Tax (CGT) – typically 6% of the higher of the gross selling price, BIR zonal value, or fair market value (FMV) when the property is a capital asset (e.g., an individual’s non-business real property).
- Creditable Withholding Tax (CWT) – used when the property is an ordinary asset (e.g., dealer/developer/inventory). Rates vary by circumstances and are creditable against the seller’s income tax. (If the seller is VAT-registered and the sale is VATable, VAT consequences may also arise; penalties follow the same framework below.)
Documentary Stamp Tax (DST)
- Generally 1.5% of the higher of the gross selling price, zonal value, or FMV.
BIR Registration/Processing
- Submission of ONETT documentary requirements (notarized deed, TINs, IDs, tax clearances as applicable) leading to issuance of the eCAR.

Note: Local transfer taxes and Registry of Deeds (RD) fees are separate. The RD will not transfer title without the eCAR.

Statutory deadlines (the triggers for lateness)

CGT – within 30 calendar days from the date the deed of sale is notarized (i.e., from the “date of sale” in most deeds).
DST – generally on or before the 5th day following the close of the month in which the document (deed) was made/issued/accepted/transferred. In ONETT practice, DST is commonly assessed and paid during the same window as CGT/CWT, but the statutory monthly cut-off still governs the penalty clock.

If payment/filing occurs after these due dates, penalties apply.

The penalty framework for late filing/payment

Under the National Internal Revenue Code (NIRC), as amended, late filings/payments are subject to the following additions to tax:

Surcharge
- 25% of the basic tax (e.g., CGT or DST) for failure to file/pay on time.
- 50% surcharge (instead of 25%) if there is willful neglect to file, or a false/fraudulent return (this is exceptional; most late filings face 25%).
Interest
- 12% per annum (computed as “double the legal interest rate”) on the unpaid basic tax, from the due date until full payment. Compute per day; for quick estimates, pro-rate by months (months/12).
Compromise penalty
- A fixed amount based on internal BIR schedules for the specific violation (e.g., “late filing of CGT return”). This is not a tax; it is an administrative amount commonly imposed during settlement. It can sometimes be reduced or waived upon justification, but you should assume it will be assessed unless you secure relief.

Important: Surcharge and interest are computed only on the basic tax (not on each other). Interest does not accrue on the surcharge; it accrues on the unpaid basic tax until paid.

How penalties are computed (clear examples)

To make this concrete, assume a deed of sale was notarized on January 10 and presented late.

Example A – Capital Gains Tax (CGT)

Facts:
- Selling price = ₱5,000,000
- Zonal value = ₱5,500,000
- FMV (assessor) = ₱4,800,000
- Highest value = ₱5,500,000
- CGT (6%) = ₱330,000
- Due date: February 9 (30 days after Jan 10)
- Actual payment: October 9 (8 months late)
Penalties:
- Surcharge (25%) = ₱330,000 × 25% = ₱82,500
- Interest (12% p.a.) = ₱330,000 × 12% × (8/12) = ₱26,400
- Compromise = as per BIR schedule (assume a typical amount is assessed)
Total CGT remittance (excluding compromise) = ₱330,000 + ₱82,500 + ₱26,400 = ₱438,900

Example B – Documentary Stamp Tax (DST)

Facts:
- Base (higher of the three values above) = ₱5,500,000
- DST (1.5%) = ₱82,500
- Due date: February 5 (5th day following the close of January)
- Actual payment: October 5 (8 months late)
Penalties:
- Surcharge (25%) = ₱82,500 × 25% = ₱20,625
- Interest (12% p.a.) = ₱82,500 × 12% × (8/12) = ₱6,600
- Compromise = as per BIR schedule
Total DST remittance (excluding compromise) = ₱82,500 + ₱20,625 + ₱6,600 = ₱109,725

If the BIR finds badges of fraud or willful neglect, the 50% surcharge may apply instead of 25%. If the basic tax is zero (e.g., exempt transaction proved with complete evidence), no surcharge/interest applies because there is no basic tax to which they can attach—though administrative issues (and delay in issuing eCAR) can still arise if you file nothing.

Common late-registration scenarios and their treatment

CGT scenario (individual selling a capital asset)
- Late payment results in 25% surcharge + 12% annual interest + compromise.
- eCAR is withheld until settled.
CWT scenario (ordinary asset seller, e.g., developer)
- If the required creditable withholding was not withheld/remitted on time, the withholding agent can be assessed the basic tax plus 25% surcharge, 12% annual interest, and a compromise penalty. Input VAT or VAT liabilities (if any) follow similar penalty rules.
Undervaluation or wrong tax type
- If the deed uses a price below zonal value and you paid on that price, the BIR will recompute based on the higher value and assess the deficiency plus the same penalties.
- If you paid CWT but the property is later classified as a capital asset (CGT), the BIR may assess the proper tax in lieu of the incorrect one, with penalties on any deficiency.
Installment sales
- If properly documented as installment, CGT/CWT timing can differ (e.g., on initial/each installment for ordinary assets; special CGT rules apply in limited cases). Payment after the specific due dates still triggers the same penalty framework.
Deemed donation
- If the selling price is unreasonably low without valid consideration, the BIR may treat part/all as a donation, potentially triggering Donor’s Tax (with its own surcharge/interest/compromise if late).

Collateral consequences of lateness

No eCAR, no transfer – The eCAR will not be issued until all taxes and penalties are paid. Without the eCAR, the Registry of Deeds will not transfer title.
Audit exposure – Late presentation can invite more probing of valuation, seller classification, and VAT/CWT compliance.
Carried interest – Interest continues to run until full payment, so delays increase cost.

Possibilities for relief or reduction

Abatement/Compromise (Sec. 204) – The Commissioner (or delegated officials) may abate or cancel surcharge and/or interest for reasonable cause (e.g., fortuitous events, BIR system issues, clear official error). Results vary; prepare documentary proof.
Compromise penalty negotiation – While commonly imposed, compromise amounts can sometimes be reduced depending on facts and the applicable internal schedule.
Wrongful classification corrections – If you were originally assessed under the wrong tax type and can document the correct one, recomputation may significantly reduce the basic tax (and thus the penalties).

Practical playbook to cure late BIR registration

Gather documents – Notarized deed, TINs of parties, IDs, old title/tax dec, proof of payment (if any), sworn declarations (if needed), and other ONETT checklists.
Compute the proper tax base – Compare selling price, zonal value, FMV; always use the highest.
Determine the due dates and lateness – CGT’s 30-day rule and DST’s monthly cut-off.
Compute additions to tax – Apply 25% surcharge and 12% p.a. interest on the basic tax from due date to intended payment date; add a compromise per the BIR’s schedule.
File and pay at the RDO/ONETT Center – Submit returns (e.g., CGT/CWT, DST), pay the computed amounts, and lodge the documentary set for eCAR.
Pursue abatement if justified – File a written request with evidence if extraordinary circumstances warrant reduction of surcharge/interest or compromise.
Secure the eCAR and proceed to RD – Once issued, pay local transfer taxes and register with the Registry of Deeds.

FAQ

Is there a separate “penalty for late registration of the deed” aside from tax penalties? No distinct penalty just for “late presentation” exists in isolation. The penalties arise from late payment/filing of the applicable taxes (CGT/CWT and DST). However, the eCAR (and thus the title transfer) will be withheld until these are settled.

Do penalties apply if the sale is exempt? If a transaction is truly exempt (e.g., a transfer to the government under specific laws, or a valid exempt reorganization) and you can substantiate it, the basic tax is zero, so surcharge/interest on that tax are zero. Filing the proper exemption claim and documentation is still required to obtain an eCAR.

What interest rate should I use? Use 12% per annum (double the legal interest rate) on the basic unpaid tax, counted from the statutory due date until actual payment. Compute precisely by days if you want accuracy; the BIR will do a day-count.

What if we discover the mistake years later? Interest continues to accrue until paid. The BIR may also raise questions on valuation and classification. It’s usually cheaper to settle early than to wait.

Key takeaways

Late means missing the CGT 30-day and/or DST monthly due dates.
Penalties consist of 25% surcharge, 12% annual interest on the basic tax, and a compromise penalty.
No eCAR is released until all are paid—blocking title transfer.
Relief is possible (abatement/compromise) with strong justifications, but it’s not automatic.
Compute carefully using the highest of selling price, zonal value, or FMV; then apply penalties from the proper due dates.

Simple calculator template (you can reuse)

Identify the highest value among selling price, zonal value, FMV.
Compute CGT (6%) or apply CWT/VAT as appropriate.
Compute DST (1.5%) on the same base.
For each tax that’s late:
- Surcharge = basic tax × 25% (or 50% in fraud/willful neglect cases)
- Interest = basic tax × 12% × (number of late days/365)
- Compromise = per BIR schedule
Total due = basic tax + surcharge + interest + compromise.

If you want, tell me your deed date, the three values (price/zonal/FMV), and your intended payment date—I can run the full penalty math for you.