WHAT IS A CERTIFICATE OF AUTHORIZING REGISTRATION IN THE PHILIPPINES?
In a nutshell, a certificate of authorizing Registration (CAR) in the Philippines is a document furnished by the Bureau of Internal Revenue (BIR). It essentially signifies that you have paid all the taxes required on any property you have sold. Among other things, it includes the capital gains tax, documentary stamp tax, and certification fees.
WHY IS A CERTIFICATE OF AUTHORIZING REGISTRATION IN THE PHILIPPINES SO IMPORTANT?
As said above, a certificate of authorizing Registration is an important document that is released by the Bureau of Internal Revenue that confirms all necessary taxes with regard to a sale/estate tax/donor’s tax/extrajudicial settlements have been settled by the party responsible which is typically the seller in this case. That said, you may ask what makes this document so important.
Well, the certificate of authorizing Registration in the Philippines is essentially a pivotal document that you will need so that you can successfully transfer a property to the buyer. This certificate along with a tax clearance (TCL) released by the same bureau (BIR), are necessary proofs to show that all proper taxes on the transaction have been paid. Likewise, the Registration of Deeds will require these documents as these will be presented as a pre-requisite for title transfer.
WHAT IS THE PROCESS OF GETTING A CERTIFICATE OF AUTHORIZING REGISTRATION IN THE PHILIPPINES?
To make sure that the Bureau of Internal Revenue (BIR) releases a certificate of authorizing Registration to you, it is necessary to follow a strict process.
1.) Your initial plan is to ensure you have a notarized document that evidences the sale of the real property classified as a capital asset. This is typically a Deed of Absolute Sale. You may find samples of this document by doing a quick search on Google.
2.) Next up, you need to pay the taxes required, which are the Capital Gains Tax and the Documentary Stamps Tax. The process for paying both can be found by doing a search on Google.
3.) After you have paid all the necessary taxes, your next step is to request the issuance of the documents (Certification of Authorizing Registration and Tax Clearance) from the Revenue District Office where the real property is located. You will also need to submit all the essential documents supporting that such a transaction occurred, as well as proof that correct taxes (both type and amount of tax) have already been paid.
4.) The release of the CAR by the Revenue District Office for the transfer of real property will be where the real property is located. With that in mind, it is imperative to determine where the correct Revenue District Office is as you will be paying taxes in the Authorized Agent Banks that the Revenue District Office is partnered with.
CAVEAT: It is quite possible to think that real property falls under the jurisdiction of one Revenue District Office when in fact, it belongs in another. If this occurs and you have already paid the necessary taxes in the Authorized Agent Bank of another Revenue District Office, you will need to undergo a specific set of processes to ensure that the payments you have made will be transferred to the correct Revenue District Office. In most cases, this added process can encumber an already lengthy procedure and may delay it further.
That said, it is advised to consult the coverage of each Revenue District Office. Take a look at the big map they have at their office, and check if the property in question is indeed within the jurisdiction of the said Revenue District Office.
WHAT ARE THE MANDATORY REQUIREMENTS?
a.) Tax Identification Number (TIN) of both the buyer and seller and issuing corporation. If one of them does not have a TIN, they will need to get one by filling out and submitting the necessary BIR form.
b.) Notarized Deed of Absolute Sale/Document of Transfer. The original and at least two photocopies will be required. Original is necessary to compare the photocopies, but only the photocopies will be retained by the BIR. All of these should be duly notarized/consularized.
c.) All the Applicable Capital Gains Tax, Documentary Stamp Tax, and Donor Tax return.
d.) Official receipts of Capital Gains Tax, Documentary Stamp Tax, and Donor’s Tax payments. Additionally, you should bring all the receipts of penalties, compromises, and surcharges if applicable.
e.) Stock certificates, if there are any
f.) Certification fee
g.) The audited financial statements of the issuing corporation closest to the year of transaction
h.) Proof of acquisition of shares by the transferor
Keep in mind that if you wish for the application of the Certificate of Authorizing Registration to be done at your behest by a representative, a notarized Special Power of Attorney will be required where the document will identify the specific name of the representative.
The Certificate of Authorizing Registration is valid for five years from the date of issue.
