A Certificate Authorizing Registration is a legal document that serves as a tax clearance for the transfer of certificate of title or condominium certificate of title of property. The application for a CAR is a mandatory requirement to prove that taxes due of the property are already paid for before selling.
When and where do I file for an issuance of the CAR?
The application for a CAR certificate is filed electronically through the eCAR registration at the Bureau of Internal Revenue, where the period of its issuance may take fifteen (15) to thirty (30) days upon its application.
Who is the officer-in-charge that releases the CAR?
The designated Revenue District Officer (RDO) where the property is located shall release the CAR certificate requested by the taxpayer. The RDO has the right to not allow any transfer of title when the eCAR certificate is not validated by the BIR.
What happens to my manually applied CAR certificate?
Any CAR certificates that were manually issued before the execution of R.R. 3-2019 shall be subject to revalidation by the BIR. Any submission of manual CAR certificates shall not be accepted by the RDO as manual CAR certificates are to be deemed expired unless revalidated. Manual CAR certificates are to be replaced with the new issued eCAR certificates upon revalidation.
How long is the validity of the eCAR?
The validity of an eCAR certificate is five (5) consecutive years from the date of its issuance. Once the validity period lapses, the eCAR certificate shall have no effect with future transfer of certificate of title or condominium certificate of title transfers, thus a new eCAR certificate is needed.
What are the Basic Requirements for the application of the eCAR?
The basic requirements to be submitted to secure an eCAR certificate are the following:
- Certified True Copy of the Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT)
- Certified True Copy of the Latest Tax Declaration
- Property Sketch Location (if applicable)
- Original Deed of Conveyance/Deed of Sale with Special Power of Attorney (SPA)
- BIR Form No. 2000 (ONETT) – Documentary Stamp Tax Return
- Capital Gains Tax Return (if applicable)
- Proof of Withholding Tax (if ordinary asset)
- Certification Fee of PhP 100
For registered and unregistered land/real property, how shall the eCAR be issued?
- For registered land/real property:
The eCAR certificate shall be issued per title of the property to be transferred. Only one (1) eCAR certificate shall be issued despite separate tax declarations.
- For unregistered land/real property:
Unlike with registered land, the eCAR certificate for unregistered land shall be issued per tax declaration covering the improvements on the land.
Am I subject to penalties if I do not have a CAR certificate?
Yes. One of the most common penalties received are fines, compromise penalties and interests issued depending on the value of the property at question. Surcharges ranging from 25% - 50% may arise when subject to fraudulent acts.
This is not a penalty per se but without the eCAR certificate, it will render the transfer of the transfer of certificate of title or condominium certificate of title to the new owner difficult or nearly impossible.
I am a foreign national; am I eligible to secure a CAR certificate?
As a foreign national, no you are not eligible to secure an eCAR certificate for land, as only Filipino citizens are allowed and are eligible to attain such a document. Unless, you are a qualified foreigner allowed to own land in the Philippines. See further discussion under this link.
You may however secure an eCAR for an improvement or building but with no land attached.
Am I subject to pay Capital Gains Tax (CGT) when selling and transferring the title of my property?
Yes. It is a mandatory requirement to take care and pay the issuance of your Capital Gains Tax (CGT) of the property you are about to sell. The reason behind this is that the CGT issuance is a main requirement when applying for an eCAR certificate.
You may also view our preceding BIR CAR process to learn more about it. Should you need help or assistance in the processing of the necessary requirements for BIR CAR, you may contact us at info@filedocsphil.com or +63.977.241.5709.
The Electronic Certificate Authorizing Registration (eCAR) is an attestation by the Bureau of Internal Revenue (BIR) Commissioner (or his duly authorized representative) which confirms that the taxes incurred in the transfer of real and personal properties have already been paid. Basically, it is a tax clearance document issued by the BIR. An eCAR is a mandatory requirement, for without an eCAR, the title or ownership to such real or personal properties cannot be transferred to the new owner.
BIR has developed the eCAR System which creates the electronically generated Certificate Authorizing Registration (CAR). The said system has barcode verification in order to prevent errors incurred in manually preparing the CAR and to eliminate the risk of having spurious CAR documents.
On April 8, 2019, the BIR issued the Revenue Regulations (RR) No. 3-2019 which directs that only eCARs issued by the BIR (from the eCAR system) are accepted by the Provincial, City and Municipal Assessor's Offices of all LGUs, banks, and other issuers of Stock Certificates, Bonds and other similar Paper Securities.
What does an eCAR form for transfer of shares look like?
BIR Form No. 2313-P is used for transactions involving transfer of personal properties. On the other hand, BIR Form No. 2313-R is for transactions involving transfer of real properties.
Under the Corporation Code, shares of stock are personal property. Thus, the eCAR form for transfer of shares is BIR Form No. 2313-P.
What is the difference between eCAR and CAR?
The eCAR system has replaced the manually-issued CARs. An eCAR document has a system-generated barcode and a Barcode Reference Number (BRN) for verification purposes. Moreover, the following are also stamped on all the backpages of the original copy of the transfer document (such as a Deed of Sale, Deed of Assignment, Deed of Extrajudicial Settlement of Estate, etc.)
- System-generated information, such as eCAR number;
- Date of eCAR issuance;
- Amount paid;
- Date of payment; and
I only have the manually-issued CAR. What should I do?
The following are considered expired manual CARs and are no longer valid:
- Manually-issued CARs that are due for revalidation
- Manually-issued CARs not yet presented to the Register of Deeds (RD)
- Naturally issued CARs with partial transfer of properties
It is necessary to replace the above-mentioned CARs with an eCAR. Note that you still need to present the expired CARs during the eCAR application.
Why do I need an eCAR in transferring corporation shares?
Under Section 63 of the Corporation Code, shares of stock are considered as personal property. The provision also requires that shares of stock must have a stocks certificate. Note that herein shares of stock pertain to those not traded in the stock exchange.
Shares of stock (with corresponding stock certificates) are validly transferred by strictly following the three conditions below:
1. the delivery of the certificate;
2. the endorsement of the owner (or his agent) of the certificates; and
3. the registration of the transfer of shares of stock in the books of the corporation.
The eCAR is a mandatory requirement before a Corporate Secretary can record the transfer of shares in the books of a corporation. The lack of an eCAR renders the transfer of shares invalid. Further, RR No. 3-2019
mandates that an eCAR is necessary before the Corporate Secretary can issue new stock certificates bearing the new owner’s name.
What happens if a new stock certificate is issued without an eCAR?
If a Corporate Secretary of a Philippine corporation (1) issues new stock certificates to a new owner; or (2) records the transfer of shares in the books of the corporation, both without an eCAR, the said Corporate Secretary will incur administrative penalties/liabilities.
What are the requirements for an eCAR?
The following are the basic requirements for an eCAR for transfer of shares:
- Duly accomplished BIR Form 1707
- Taxpayer Identification Number (TIN) of Seller/s and Buyer/s
- Duly Notarized Original Deed Of Absolute Sale/Document of Transfer
- Copy of Stock Certificate to be transferred
- Proof of acquisition cost (i.e. Subscription Contract, Deed of Sale: fair market value (FMV) at the time of acquisition)
- Validated return and Original Official Receipt/Deposit Slip as proof of payment; for no payment return, copy of Acknowledgment Receipt of return filed thru eBlR Forms
- Capital gains tax return (Form 1707)
- Documentary Stamp Tax Return (Form 2000-OT)
- Certificate fee of PhP100.00 (Form 0605)
- Secretary’s Certificate or Board Resolution, approving the sale/transfer of the shares of stocks and indicating the name and position of the authorized signatory to the Deed of Sale/Assignment if the seller/transferor is a corporation
- Duly notarized Special Power of Attorney (SPA) for Authorized Representative
- BIR Form 1904 for TIN verification of seller and buyer
- Latest Audited Financial Statement of the issuing corporation with computation of the book value per share
- Such other documents may be required by law/rulings/regulations/etc.
- BIR Form 1904 for TIN verification of both buyer and seller
How long is the validity of an eCAR?
As per RR No. 3-2019, eCARs are now valid for five years from the date of issuance. After the lapse of five years, the eCAR document is deemed permanently expired. A new eCAR will be issued upon request of the taxpayer.
How long does the process take?
With the COVID-19 pandemic, process time can take longer than usual. It will take around one to two months, depending on the availability of your documents, so plan accordingly.
What is the process for the eCAR application?
1. Go to the BIR Regional District Office (RDO) having jurisdiction over the seller’s address and submit the BIR Form 1904 in order to verify the TIN number of seller and buyer.
2. After the verification, go to the BIR National Office - ONETT to submit the required documents.
3. The ONETT will evaluate the completeness and validity of the application. If requirements are complete, the ONETT will do the necessary computation for Capital Gain Tax for the BIR Form No. 1707 (Capital Gains Tax Return).
4. The DST and Capital Gains Tax Return (with computation) shall be filled and paid in any Authorized Agent Bank (ABB) under the jurisdiction of the RDO where the seller/transferor is registered 30 days after each sale.
5. Upon payment, keep the bank validated payment receipt and the stamped BIR 1707 and DST 2000-OT forms. These will be the proof of filing and payment which will be submitted to ONNET along with the other requirements.
6. Submit the received BIR 1707 together with the other requirements to the ONNET Department.
7. The ONNET officer will give a claim stub indicating the date and time of the release of CAR
8. Once the eCAR has been released, the Corporate Secretary can now issue the new stock certificates.
You may also avail of FILEDOCSPHIL services to obtain the eCAR for you. CLICK HERE for a free quote.
How do I compute the Capital Gains Tax (CGT) on my own?
The following are the current rates for Capital Gains Tax (CGT) pursuant to Republic Act No. 10963 or the TRAIN Law, effective January 1, 2018 to present.
- The following are the current rates for Capital Gains Tax (CGT) pursuant to Republic Act No. 10963 or the TRAIN Law, effective January 1, 2018 to present.
- The CGT for foreign corporations is at 5% for Php 100,000 and below; and at 10% for any amount in excess of Php 100,000.
The eCAR services of FILEDOCSPHIL already includes the computation of Capital Gains Tax.
Why do I need FiledocsPhil’s services to process the eCAR?
It is possible to process the eCAR application on your own. However, you must allot time and effort and expect multiple trips to the BIR just to complete your eCAR application. Indeed, you have to plan ahead and budget your time accordingly because there are times when the documents could be unavailable, etc. Expect other possible setbacks especially with the COVID-19 pandemic, which makes process time longer than usual.
You will save time if you are assisted by an expert. Skip the long, tedious process by having your eCAR application processed by FILEDOCSPHIL. CLICK HERE for a free quote.
Questions? We got you. Ask more about eCAR application concerns here.