No corruption, just graft

Well, I'm getting a lesson on Philippine law. In 2000, my parents wanted to transfer the title of the land to me and my sister Sam, even though they were both still alive. My mom called the Philippine consulate in San Francisco to figure out how to do it. They didn't know. We asked around for a lawyer who was familiar with Philippine law; well, what's the likelihood of finding one in SF? So, we used the US way of transferring title -- they sold it to us for $1. Then we had the deed of sale notarized at the Philippine consulate office. Later, Sam did a quit claim deed the same way.

When I arrived here, we went to the Registry of Deeds to find out what we need to do to record the transaction. And one of the things we had to do is to go to the BIR office; it turned out that we had to pay capital gains tax. Well, I'm a bit familiar with capital gains taxes in the US, so I figured that since the land was sold for $1, it's actually a capital loss. If I sell it (which I don't intend to), then I would pay capital gains tax. Well, I was dead wrong.

In the Philippines, the capital gains tax is based on the property value which the government assigns to it. According to the government, that piece of land, without any improvements, is worth PhP300,000. I figured, well, okay, so the law is different. Capital gains tax couldn't be that bad; in the US, it's 20%. I was wrong again.

Here's the breakdown of what I have to pay (in PhP):

	Cap gains tax	Doc stamp
basic	50,625	12,660
surcharge	12,656	3,165
interest	30,375	7,596
c.p.	12,000	3,000

For a grand total of PhP132,077 or $2,401. Almost half the property value!

Only the first number made sense to me. Whatever a document stamp is, I figure it's a government processing fee of some sort. The surcharges, I understand, because the "sale" occurred in 2000, so the taxes are late. However, we did our due diligence to find out what the laws were. The BIR has no website I know of that tells me what the capital gains taxes are based on. We only found out about paying capital gains when we went to visit the Registry of Deeds. And the interest! Sixty percent!!! Has the Philippine government turned into a loan shark?!? And I have no idea what "c.p." is.

We pleaded for leniency and they were willing to adjust the charges down to PhP79,000. We get a receipt, but not for that full amount. Part of that amount will end up in someone else's pocket, of course. We're bringing in the cash on Thursday.

As Allan the hired driver said, there's no corruption in the government, just graft.

Do I really want to start a business in this environment?