Capital Gains Tax in the Philippines (2026)

TL;DR: The Philippines runs two separate capital gains tax regimes. Real property held as a capital asset is taxed at 6% of whichever is higher between the gross selling price and the BIR zonal value or fair market value. Shares in a domestic corporation that are not traded on the stock exchange are taxed at a flat 15% of the net capital gain, under the TRAIN law, regardless of whether the seller is an individual or a corporation, resident or foreign. Both taxes are generally due within 30 days of the sale, and a Certificate Authorizing Registration from the BIR is a hard prerequisite before the title or the shares can legally change hands. A tax treaty can sometimes cut or remove the 15% share tax for a foreign seller, but only after the BIR confirms entitlement, and many treaties still reserve gains from real-property-heavy Philippine companies to Philippine tax.

Two capital gains taxes, not one

Founders who search “capital gains tax Philippines” usually assume it is a single line item, the way it often works in their home country. It is not. The Philippines taxes capital gains under two distinct final-tax regimes, each with its own rate, its own tax base, and its own filing form. One applies when the asset sold is real property classified as a capital asset. The other applies when the asset sold is shares of stock in a Philippine corporation that are not traded through the stock exchange. If your exit involves selling the operating company itself rather than its underlying land or building, you are almost always in the second regime, and the numbers work very differently from the first. Both sit inside the broader Philippine tax system covered on our taxes page, but they deserve their own walkthrough because the mechanics, deadlines, and paperwork rarely match what a foreign seller expects.

Capital gains tax on Philippine real property

What counts as a capital asset

The 6% real property capital gains tax applies only to land and buildings classified as capital assets, meaning property not used in the seller’s trade or business. A vacant residential lot, a condo unit held for personal use, or a house you bought as an investment falls here. A warehouse or office building your company actively uses in operations is an ordinary asset instead, and its sale is taxed under regular income tax and creditable withholding tax rules rather than this regime. Getting this classification wrong is one of the most common mistakes foreign owners make when they sell company-owned real estate, so confirm the asset’s classification with your accountant before you assume the 6% rate applies.

How the 6% tax is computed

Section 24(D) of the National Internal Revenue Code, for individual sellers, and Section 27(D)(5), for domestic corporations, both impose a final tax of 6% on the gain presumed to have been realized from the sale, exchange, or disposition of real property classified as a capital asset. The tax is not computed on actual profit. It is computed on whichever is higher among three figures: the gross selling price stated in the deed, the BIR zonal value for that location, and the fair market value carried on the local assessor’s tax declaration. If you sell a property for less than its zonal value, perhaps to close a deal quickly or because you are related to the buyer, the BIR still taxes the higher zonal figure. This catches out sellers who assume the contract price is the only number that matters.

Who files and pays

BIR Form 1706 is the return used for this tax, and in practice the buyer commonly withholds the 6% from the purchase price and remits it directly, since the buyer is the party who needs a clean Certificate Authorizing Registration to register the new title. Nothing in the law forces this allocation, so a sale contract should state plainly who carries the tax, especially in a cross-border deal where the foreign seller may not have a local bank account ready to receive a reduced net amount.

Worked example: selling a condo unit

A foreign national sells a Makati condo unit for a stated price of 8,000,000 pesos. The BIR zonal value for that unit’s location works out to 9,500,000 pesos, which is higher than the contract price. The tax base is 9,500,000 pesos, not 8,000,000 pesos.

• Gross selling price: 8,000,000 pesos
• BIR zonal value: 9,500,000 pesos (higher, so this is the base)
• Capital gains tax due: 9,500,000 x 6% = 570,000 pesos

The seller nets less than a naive “8,000,000 minus 6%” calculation would suggest, because the zonal value, not the contract price, sets the tax.

Capital gains tax on shares in a Philippine company

The 15% flat rate under the TRAIN law

For a foreign founder exiting a Philippine subsidiary or joint venture, this is the regime that actually applies. The TRAIN law, Republic Act No. 10963, amended Section 24(C) of the tax code for individuals and Section 27(D)(2) for domestic corporations to impose a final tax at the flat rate of 15% on the net capital gain realized during the taxable year from the sale, barter, exchange, or other disposition of shares of stock in a domestic corporation, except shares sold through the local stock exchange. Before TRAIN took effect on January 1, 2018, this used to be a bracketed rate of 5% on the first 100,000 pesos of net gain and 10% on the excess. TRAIN replaced both brackets with one flat 15% rate.

The same 15% rate applies across the board. It does not matter whether the seller is a Philippine citizen, a resident alien, a domestic corporation, a resident foreign corporation, or a nonresident foreign corporation with no other presence in the country. Section 28 of the tax code applies the identical 15% final tax to nonresident foreign corporations selling unlisted domestic shares, so a foreign parent company liquidating its Philippine subsidiary’s shares faces the same rate as a local individual founder would.

What “not traded through the stock exchange” actually covers

This phrase captures the overwhelming majority of Philippine share sales that involve a foreign-owned small or mid-size company, because almost none of them are listed. A private share purchase agreement, a founder buyout, an investor exit through a secondary sale, and a straight liquidation of a subsidiary’s shares back to the parent all count as “not traded through the stock exchange.” Only shares actually sold on the Philippine Stock Exchange are carved out, and those instead pay a separate stock transaction tax collected by the broker at the point of sale, not this capital gains tax.

Net capital gain, not gross proceeds

The tax base here is the net gain, meaning the selling price less the seller’s cost basis, which is usually the original subscription price paid for the shares, or the acquisition cost if the shares were bought secondhand. This is the single biggest practical difference from the real property regime, where tax applies to the gross transaction value regardless of the seller’s original cost. If you subscribed to shares at par years ago and the company grew, only the appreciation is taxed. If you paid a premium for shares that later dropped in value, no tax is due because there is no net gain, though the return generally still needs to be filed.

Worked example: a foreign shareholder exits a Philippine subsidiary

A US-resident individual originally subscribed to 500,000 common shares in a Philippine subsidiary at 10 pesos par value each, an original cost basis of 5,000,000 pesos. Years later, a strategic buyer agrees to purchase 100% of those shares for 15,000,000 pesos in a private transaction. The shares are not listed on the Philippine Stock Exchange, and assume for this example that no tax treaty relief has been secured, so the 15% domestic rate applies in full.

• Gross selling price: 15,000,000 pesos
• Cost basis (original subscription): 5,000,000 pesos
• Net capital gain: 15,000,000 - 5,000,000 = 10,000,000 pesos
• Capital gains tax due: 10,000,000 x 15% = 1,500,000 pesos

Documentary stamp tax adds a further cost on top of that 1,500,000 pesos, covered below. Once the seller has settled both taxes and received the Certificate Authorizing Registration, the net sale proceeds are the seller’s to keep or move; if that seller wants to send the money out of the Philippines afterward, the mechanics of moving it are a separate question from the tax owed on the gain itself, and our guide on repatriating profits from the Philippines walks through that step.

The Certificate Authorizing Registration: the deadline that actually bites

Why the CAR matters more than the tax itself

Paying the capital gains tax is not the end of the process. The BIR issues a Certificate Authorizing Registration, commonly called a CAR or eCAR, only after it confirms that capital gains tax, any applicable creditable withholding tax, and documentary stamp tax have all been paid on the transaction. Without a CAR, the Registry of Deeds will not transfer title on real property, and a corporate secretary or stock transfer agent should not record a change of ownership in the stock and transfer book for shares. In practice this means the deal is not legally finished no matter what the private sale agreement says, until the CAR exists.

The filing deadline

Both BIR Form 1706, for real property, and BIR Form 1707, for shares, must be filed and the tax paid within 30 days of the sale or disposition. For real property, that 30-day clock is generally counted from the notarization date of the deed of sale, since notarization is what makes the sale a taxable, registrable transaction. For shares, it runs from the date of the sale or disposition itself. Missing the deadline triggers a 25% surcharge on the tax due plus interest, and the CAR application cannot move forward until the return is filed and everything owed, including penalties, is paid.

What to gather before you file

At minimum, expect to assemble the notarized deed of sale or share purchase agreement, the seller’s and buyer’s taxpayer identification numbers, the property’s tax declaration and certified true copy of title (for real property) or the company’s articles of incorporation and stock certificates (for shares), and proof of payment of the tax itself. The BIR’s Revenue District Office covering the property’s location, or the seller’s or company’s registered address for shares, handles the filing. Because the CAR only gets issued after everything checks out, foreign sellers are better off starting this process the same week the deed is signed rather than waiting until the 30-day deadline is close.

Documentary stamp tax: the cost people forget

Capital gains tax rarely travels alone. A deed of sale or conveyance of real property carries its own documentary stamp tax under Section 196 of the tax code, at 1.5% of the consideration or fair market value, whichever is higher, separate from and in addition to the 6% capital gains tax. On a share sale, documentary stamp tax applies to the original issuance of shares and again when those shares are later transferred. The Capital Markets Efficiency Promotion Act, Republic Act No. 12214, reduced the original issuance rate to 0.75% of par value, down from 1%, effective July 1, 2025, so it now matches the long-standing 0.75% rate, equivalent to 1.50 pesos per 200 pesos of par value, that already applied to a sale or transfer of existing shares. In the worked share example above, transferring shares with a 5,000,000 peso par value adds roughly 37,500 pesos of documentary stamp tax on top of the 1,500,000 peso capital gains tax. Shares actually listed and traded on a stock exchange are now exempt from this stamp tax under the same 2025 law, but that exemption does not reach the unlisted private company sales this article is about.

Real property CGT vs shares CGT at a glance

Can a tax treaty reduce or eliminate capital gains tax on shares?

Sometimes, but do not assume it as a default. If the seller is a resident of a country that has an income tax treaty with the Philippines, and that treaty’s capital gains article covers gains from shares, the treaty can reduce or fully exempt the 15% Philippine tax that would otherwise apply. This is worth checking before you assume the full 15% is unavoidable, and our guide on tax treaties between the Philippines and foreign companies explains how these agreements interact with Philippine-source income more broadly.

The catch is that most Philippine treaties do not hand out a blanket exemption on share gains. A large share of them reserve taxing rights to the Philippines when the Philippine company’s assets consist principally of Philippine real property, commonly defined as more than half of total assets, regardless of what the treaty otherwise says about capital gains. Some treaties add a separate reservation for a substantial shareholding, taxing the gain in the Philippines if the seller held above a stated percentage of the company at any point in a defined period before the sale. Whether either carve-out applies to your transaction depends entirely on the specific treaty with your country of residence and on what the Philippine company actually owns, so treat “check the specific treaty” as the operating rule rather than treating any general statement about treaty relief as a guarantee.

Claiming the reduced or exempt treatment is not automatic either. The seller generally needs to apply to the BIR, using BIR Form No. 0901-C for capital gains, for a ruling confirming treaty entitlement, which results in a Certificate of Entitlement to Treaty Benefits once approved. Without that BIR confirmation, the standard 15% domestic rate applies at the time of the transaction, and the seller who believes a treaty should have applied is left pursuing a refund claim afterward rather than simply paying less upfront. Given how much of this depends on documents the BIR has not yet seen, foreign sellers who expect treaty relief should start the confirmation process well before the deal closes, not after.

Common mistakes foreign sellers make

1. Confusing the two regimes. Assuming the property rate or the share rate applies to the wrong asset type, which throws off every downstream number in a deal model.
2. Pricing a real property sale below zonal value and expecting tax on the lower figure. The BIR taxes the higher number regardless of what the deed states.
3. Forgetting cost basis documentation for shares. Without proof of the original subscription price or acquisition cost, the BIR may treat the entire selling price as the gain, which is a materially worse outcome.
4. Assuming a treaty exemption without a BIR ruling. A treaty that looks favorable on paper does not reduce the withholding or filing obligation until the BIR has confirmed entitlement.
5. Treating the 30-day deadline as a soft target. Because the CAR is required to complete the legal transfer, a late filing does not just cost a surcharge, it stalls the whole transaction.

This guide is general information, not legal advice on your specific facts. Book a consultation if you want a fixed-scope review of your capital gains tax exposure before you sign or file.