BIR Ruling No. 435-2016

REPUBLICOFTHE PHILIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE

Quezon City

Section 20 of RA 7279

BIR Ruling No.063-14

#435-2016

12-16-2016

Diliman, Quezon City NATIONAL HOUSING AUTHORITY Quezon Memorial Elliptical Road

Gentlemen: Attention: Romuel P. Alimboyao Department Manager

Republic Act (R.A.) No. 7279, otherwise known as the "Urban Development and Eddmari Construction and Trading/Aina Construction - Joint Venture, for the issuance of Certificate of Tax Exemption for the socialized housing project, St. Peter and Paul Housing Project, located in Brgy. Bagacay, San Dionisio, Iloilo, under the Yolanda Permanent Housing Project of the National Housing Authority (NHA), pursuant to Housing Act of 1992". This refers to your letter dated September 28, 2016, requesting, on behalf of

of Award dated June 20, 2016 in favor of Eddmari Construction and Trading/ Aina Construction - Joint Venture for the Procurement of Fully Developed Lots and Completed Housing Units under the NHA's Yolanda Permanent Housing Program Located at Brgy. Bagacay, San Dionisio, Iloilo- 1,000 Housing Units, with a contract registered with the Department of Trade and Industry (DTI) with Certificate of price of Registration No. by Aina Gemenese Muyot Garcia (TIN: proprietorship owned by Edgardo Aguilar Sagum (TIN: DTI under Certificate of Registration No. Documents submitted show that Eddmari Construction and Trading is a sole that Aina Construction is also a sole proprietorship owned that the NHA has issued a Notice and duly registered with the ) and duly

Housing Project, Brgy, Bagacay, San Dionisio, Iloilo, was executed on September 16, Developed Lots and Completed Housing Units (1.000 Units), St. Peter and Paul 2016 between NHA and Eddmari Construction and Trading/ Aina Construction -- Joint Venture, whereby the latter committed to deliver 1,000 units (House and Lot Package) for and in consideration o To give effect to the Notice of Award, a Contract for the Procurement of Fully and that according to the contract, the

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scope of works includes Survey Works, Earthworks, Road Works, Drainage Works, Water System, Electrical Power Lines, Miscellaneous Works and Housing Construction.

provides: In reply, please be informed that Section 20 of Republic Act (RA) No. 7279

"Sec. 20. Socialized Housing. --- To encourage greater private sector participation in socialized housing and further reduce the and homeless, the following incentives shall be extended to cost of housing units for the benefit of the underprivileged the private sector: Incentives for Private Sector Participating in

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"(d) Exemption from the payment of the following:

() (1 Capital Gains Tax on raw lands used for the Project-related income taxes:

(3 Value-added tax for the project contractor project;

concerned:"

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Section 3 (r) of R.A. 7279 defines "socialized housing" as follows:

"(r) "Socialized housing" refers to housing programs and in accordance with the provisions of this Act; projects covering houses and lots or homelots only for the underprivileged and homeless citizens which shall includesites and services development, long-term financing, liberalized terms on interest payments, and such other benefits (Underscoring supplied) undertaken by the Government or the private sector

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a socialized housing program of the NHA pursuant to R.A. 7279, in connection with components in St. Peter and Paul Housing Project, Brgy. Bagacay, San Dionisio, Iloilo. its Yolanda Permanent Housing Project, the income directly realized by Eddmari undertake the construction of 1.000 Housing Units with its necessary construction underprivileged and homeless citizens undertaken by the Government or the public sector, are entitled to exemption from income tax on revenues directly derived Joint Venture is a project contractor whose services have been engaged by the NHA to only, including sites development for socialized housing projects, intended for the therefrom. Considering that Eddmari Construction and Trading/ Aina Construction Based on the foregoing, housing projects covering houses and lots or homelots

N

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Construction and Trading/ Aina Construction -- Joint Venture from the construction of the 1.000 Housing Units, with its necessary construetion components, in St. Peter and Paul Housing Projcct, shall be exempt from project-related income taxes. (BIR Ruling No. 063-14 dated February 19, 2014)

from the construction of the 1,000 Housing Units, with its necessary construction components, in St. Peter and Paul Housing Project, by Eddmari Construction and Trading/ Aina Construction -- Joint Venture shall be exempt from VAT. However, the the socialized housing project, since VAT is an indirect tax which can be passed on by purchases of goods/articles by Eddmari Construction and Trading/ Aina Construction the seller of the goods/services. Joint Venture shall be subject to VAT, even if the said purchases are to be used for Moreover, pursuant to Section 20 (d)(3) of R.A. No. 7279, the gross receipts

However, if upon investigation,it will be disclosed that the facts are different, then this ruling shall be considered null and void. This ruling is being issued on the basis of the foregoing facts as represented.

A Very truly yours,

Commissioner of Internal Revenue CAESAR R. DULAY

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