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Certificate of Authorizing Registration (CAR) in the Philippines: Everything You Need to Know

As a responsible taxpayer who has been dutifully paying taxes, you already know what a CAR or the Certificate Authorizing Registration in the Philippines is. However, while you may know what this is, you may not know what it does.

For starters, the CAR is one of the most important documents you will need should you transfer the title of a specific property from the seller to a buyer, along with the Tax Clearance (TCL for brevity). Both documents can be obtained from the BIR (Bureau of Internal Revenue). More importantly, both will prove that you have already paid the proper taxes on the transaction. These are pre-requisite documents that the Registry of Deeds will require for title transfer.

This article will explore what CARs are and what you must learn about them.

CERTIFICATE AUTHORIZING REGISTRATION (CAR) DEFINED

In the Philippines, CAR is a certificate released by the BIR. It proves that you have already settled or paid all of the necessary taxes that properties for selling incurred. These taxes are capital gains and documentary stamps, whereas the fees are for certification.

WHAT MAKES A CAR IMPORTANT?

When transferring the title of a particular property, you need to have a CAR since it is mandatory. More importantly, under Philippine Tax Code, Section 58(E) requires this certification. Failure to secure one will mean that the title of a property in question may not be transferred. The Registry of Deeds may choose not to issue the title transfer, whether property or condominium, without a CAR.

If not for title transferring purposes, a CAR is also instrumental in the authorization of a buyer’s shares of stock. Without a BIR-issued CAR, the corporations may not be able to issue the document certifying the registration of the stocks under the name of the buyer.

ADVANTAGES OF HAVING A CAR

As the registration is essentially an indispensable document that serves as proof for payment of taxes on a particular property, having one inevitably comes with certain benefits:

a.) Have a payment proof

As said above, the CAR is incontrovertible proof of the settlement or payment of all the taxes that a sold property incurred. Apart from displaying that all the required taxes are paid, it is also a document that showcases how diligent a taxpayer you are, taking accountability for one’s own financial obligations.

b.) Avoid delays in the transferring of the title

With a CAR in hand, it can expedite transferring the title from the developer or previous owner to your name. It prevents any delays that may happen. Suppose you wish to speed up and make selling a particular property more convenient. In that case, you will need a Certificate Authorizing Registration in the Philippines.

WHEN DO YOU NEED A CAR?

You do not always need a CAR, considering that not all properties require one. However, the certificate is necessary if you have a property or condominium with a TCT (Transfer Certificate of Title) or CCT (Condominium Certificate of Title), respectively. You will also need a CAR when buying stocks from a Philippine-based stock corporation.

HOW TO GET A CERTIFICATE OF AUTHORIZATION?

To secure CAR from the BIR, it is imperative that you follow a strict process.

1.) Before proceeding, you must ensure that you have a notarized document that indicates the sale of real property as a capital asset. This is called the Deed of Absolute Sale.

2.) After you have secured the Deed of Absolute Sale, you should pay the necessary taxes. The process for paying both can be found by simply searching online.

3.) Upon payment of the capital gains and documentary stamp taxes, proceed to request the issuance of the documents (both the CAR and Tax Clearance) from the Revenue District Office where the real property being sold is located. More importantly, you should submit all the required documents to prove and demonstrate such a transaction occurred. Apart from this, you also need proof that the taxes have already been paid.

4.) Upon proper execution of all the steps stated above, the CAR will be released to you.

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