In the Philippine tax landscape, the transfer of real property and shares of stock involves a specialized processing framework known as ONETT (One-Time Transaction). Navigating the sequence of filings and the specific requirements for Capital Gains Tax (CGT) is critical for taxpayers to ensure the legal validity of a sale and the successful issuance of a new title.
1. Defining the Core Concepts
Capital Gains Tax (CGT)
CGT 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.
- Real Property: A fixed rate of 6% is applied to the gross selling price or the current fair market value (zonal value), whichever is higher.
- Shares of Stock (Not traded through the Local Stock Exchange): A final tax of 15% is imposed on the net capital gain.
The ONETT Concept
The One-Time Transaction (ONETT) refers to a specific unit or process within the Bureau of Internal Revenue (BIR) designed to handle taxes that do not occur regularly, such as CGT, Estate Tax, Donor’s Tax, and Documentary Stamp Tax (DST). The goal of ONETT is to consolidate these requirements to facilitate the issuance of the Electronic Certificate Authorizing Registration (eCAR).
2. The Statutory Sequence of Transactions
The process of transferring property is time-sensitive. Failure to follow this sequence often results in heavy surcharges and interest.
Step 1: Execution of the Deed
The timeline begins upon the notarization of the Deed of Absolute Sale (DOAS) or equivalent document.
Step 2: Payment of Capital Gains Tax (BIR Form 1706)
For real property, the CGT must be filed and paid within thirty (30) days following the notarization of the sale.
Step 3: Payment of Documentary Stamp Tax (BIR Form 2000-OT)
The DST is a tax on the documents/instruments conveying the property. This must be filed and paid by the 5th day of the month following the date of notarization.
Note: Because the DST deadline is often sooner than the CGT deadline, practitioners usually file both simultaneously within five days of the sale to avoid confusion.
Step 4: Application for eCAR
Once the taxes are paid, the taxpayer submits the complete "ONETT Folders" to the Revenue District Office (RDO) having jurisdiction over the property. The RDO will then process the eCAR, which is the indispensable document required by the Register of Deeds to transfer the title.
3. Mandatory Requirements for ONETT
To secure the eCAR, the following documents are generally required by the BIR:
| Document Type | Specific Requirement |
|---|---|
| Tax Returns | Duly filed BIR Form 1706 (CGT) and 2000-OT (DST) with proof of payment (Validated deposit slips). |
| Proof of Ownership | Certified True Copy of the Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT). |
| Deed of Conveyance | Notarized Deed of Absolute Sale or Document of Transfer. |
| Tax Declaration | Certified True Copy of the latest Tax Declaration for land and improvement. |
| Clearances | Certificate of No Improvement (if the land is vacant) issued by the Assessor's Office. |
| Identification | TIN of both Seller and Buyer (must be verified or updated). |
| Vicinity Map | If the zonal value cannot be readily determined. |
4. Transfer of Shares Not Traded in the Stock Exchange
While real property is the most common ONETT transaction, the sale of shares in a domestic corporation follows a similar logic:
- Tax Rate: 15% of the net capital gain.
- Deadline: Within 30 days after each sale or disposition.
- Documentary Stamp Tax: Required on the transfer of shares (BIR Form 2000-OT), due by the 5th of the following month.
- eCAR Requirement: Required by the Corporate Secretary before they can record the transfer in the Stock and Transfer Book of the corporation.
5. Consequences of Non-Compliance
The Philippine Tax Code imposes stringent penalties for failure to meet the ONETT sequence:
- Surcharge: A 25% penalty on the tax due (50% in cases of fraud).
- Interest: 12% per annum (under the TRAIN Law).
- Compromise Penalty: An additional fine based on the amount of tax unpaid.
Furthermore, without the eCAR, the Register of Deeds is legally prohibited from cancelling the old title and issuing a new one in the buyer's name, effectively leaving the transaction "unperfected" in the eyes of the public registry.
6. Exemptions to Consider
Under specific conditions, such as the sale of a Principal Residence, a seller may be exempt from the 6% CGT if the proceeds are used to acquire a new principal residence within 18 months, provided the BIR is notified within 30 days of the sale. This exemption can only be availed of once every ten years.