LRA, BIR ink MOA on property transfer

MANILA, Philippines - The government has strengthened further its real property registration and tax collection systems using the Land Registration Authority’s (LRA) newly installed computer network.

A memorandum of agreement (MOA) signed recently provides for inter-agency collaboration on the efficient collection of appropriate taxes as a result of the execution of instruments involving transfers of ownership of real property.

The document sought to “plug all loopholes to prevent tax leakage and to ensure that all taxes due to the government are collected before registration of transfer of real property is effected by the Register of Deeds.”

The MOA in effect enhanced a similar agreement executed in 1998 by the DOF, DOJ, BIR and LRA on the issue in view of the changes in procedures and implementation of the LRA’s computerization project.

 â€œIt is to the mutual interest of the Parties to revise, update, and expand the said MOA in order to expedite the delivery of services to the public and simultaneously, promptly collect the correct taxes due to the government,” the new MOA stated.

Under the agreement, the BIR can send to LRA an electronic copy of the certificate authorizing registration (CAR) issued to a person seeking to transfer real property ownership.

The CAR is issued after the buyer has settled the appropriate tax, like, capital gains, documentary stamp and estate taxes. When the new owner goes to the LRA to register the deed of transfer, the LRA would scan the CAR copy using the barcode readers installed in its registries to see if the data stored in the CAR matches with the data sent by the BIR to ensure that the payment of proper taxes have been made before issuing the title.

In case of a discrepancy between the two copies, the request for the issuance of the new title would be denied.

LRA deputy administrator Robert Nomar Leyretana explained that such a system was rendered imperative in view of the prevalence of fake CARs designed to avoid payment of the applicable taxes on transfers of ownership of real property.

“With this setup, we expect the fake CARs to be totally eradicated, which shall enable the government to collect the right amount of applicable taxes, thus help BIR improve its revenue collection efforts,” Leyretana said.

According to him, one of the most important documents needed for the transfer of ownership title from seller to buyer is the CAR and its accompanying  tax clearance from the BIR as proof that the proper taxes on the transaction have been paid.

The Register of Deeds demands the presentation of these documents as a prerequisite for title transfer, Leyretana said.