BIR Ruling No. 442-2016

BUREAU OHUNTHRNIN REVENUE REPUBLICOF THE PHILIPPINES DEPARTMENT OF FINANCE

E.O.226; RR 2-98

BIR Ruling No. 342-14; BIR Ruling No.329-14

442-2016

12-19-2016

Marbella 101 Condominium, Ground Floor, Unit 1 2223 Roxas Blvd., Pasay City 1300 DDC LAND,INC

Attention : I Engr.Edna R. Sutter President & CEO

Gentlemen:

the tax consequences of the Income Tax Holiday (ITH) granted by the Board of Investments (BOD to DDC LAND,INC.under Executive Order (EO) No.226 otherwise known as the Omnibus Investments Code of 1987, for a period of three (3) years from the start of commercial operations/ selling. This refers to your letter dated December 22, 2015, applying for tax exemption on

engaged in real estate development; that it is registered with the BOI as an Expanding existing under Philippine Laws; that it is registered with the Securities and Exchange Developer of Economic and Low-Cost Housing Project on a Non- Pioneer status for the Commission (SEC) bearing SEC Certificate of Registration No. mass housing project: Identification No. (TIN) Documents submitted disclosed that DDC LAND, INC., with Taxpayer's is a domestic corporation duly organized and : that it is

Santa Rosa Villas III Garden Project Phase 5 Name Rosa, Laguna Caingin & Pooc, Sta. Malusak, Location Brgys. BOI Reg. No. Date of BOI Registration January 5, 2016 Commercial Operation/ Start of January 2016 ITH No. of Units

Page 2 of 4 DDC Land, Inc./Sta. Rosa GardenVillas II Phase 5 #442-2016 12-19-2016

that under the Specific Terms and Conditions of its BOI Registration, DDC LAND, INC. shall construct and sell One Hundred Twenty Six (126) units of low-cost mass housing for Santa Rosa Garden Villas III Phase 5-Brgys. Malusak, Caingin & Pooc, Sta. Rosa, Laguna as follows:

Santa Rosa Garden Villas III Project Name Phase 5 Year No.of Units Volume 126 Value (PhP)

Total 126

Sta. Rosa, Laguna, is duly registered with the Housing and Land Use Regulatory Board that Santa Rosa Garden Villas III Phase 5, located at Brgys. Malusak, Caingin & Pook. HLURB) and was issued a License to Sell, to wit

Santa Rosa Villas III Project Garden Phase 5 Name Rosa, Laguna Pooc, Sta. Caingin & Malusak. Location Brgys. of Registration No. HLURB Certificate May 25,2015 Date Issued to Sell No./ Date HLURB License May 25,2015 Issued House & Lot and 16 lots No. of Units only

that according to the Specific Terms and Conditions of its BOI Registration, DDC Land, Inc. (Santa Rosa Garden Villas III Phase 5-Brgys. Malusak, Caingin & Pooc, Sta. actual start of commercial operations whichever is earlier, but in no case earlier than the date of registration; that DDC Land, Inc. (Santa Rosa Garden Villas III Phase 5-Brgys. generated from the registered project; and that revenues from units with selling price Rosa, Laguna) is entitled to ITH for a period of three (3) years from January 2016 or the Malusak,Caingin & Pooc, Sta. Rosa, Laguna)s ITH shall be limited only to the revenue exceeding P3.0M shall not be covered by ITH.

Regulations No. 2-98, as amended, by RR No. 6-2001 implementing Section 57 (B) of the by the Omnibus Investments Code of 1987. (BIR Ruling No. 342-14 dated August 26, 2014) Tax Code of 1997, as amended, the withholding tax prescribed in the said Regulations shall not apply to income payments to persons enjoying exemption from the income tax provided In reply, please be informed that under Section 2.57.5 (B)(2) of Revenue

Brgys. Malusak, Caingin & Pooc, Sta. Rosa, Laguna) is a BOI-registered project, this Accordingly, since DDC Land, Inc. (Santa Rosa Garden Villas III Phase 5-

1 HLURB Certificate of Registration No. NO. Jated August 24, 2012 due to inclusion of some saleable lots with an area of 11,574 sq.m. dated May 25, 2015 amended Certificate of Registratior

DDC Land, Inc./Sta. Rosa Garden Villias iIll Phase 5 Page 3 of 4 #442m2016 12-19-201A

Office is of the opinion that income payments received by DDC Land, Inc. in connection with its housing project, Santa Rosa Garden Villas III Phase 5-Brgys. Malusak, Caingin & Pooc, Sta. Rosa, Laguna, (on the 126 low-cost mass housing units as mentioned in the Specific Terms and Conditions of its BOI Registration), are exempt from the creditable withholding tax imposed under RR No. 2-98, as amended by RR No. 6-2001. for a period of three (3) years from January 2016 or the actual start of commercial operations whichever is earlier but in no case earlier than the date of registration2.

Malusak, Caingin & Pooc, Sta. Rosa, Laguna, involving One Hundred Twenty Six (126) Land, Inc.'s BOI-registered activity Santa Rosa Garden Villas III Phase 5-Brgys. low-cost mass housing units used solely for family home or dwelling purposes and not for commercial purposes such as leasing, retail stores, offices, etc. Furthermore, such exemption shall not cover revenues from units with selling price exceeding Three Million Pesos (P3,000,000.00) 3. (BIR Ruling No. 342-14 dated August 26, 2014) withholding tax covers only income directly attributable to revenues generated from DDC It must be emphasized, however, that the above exemption from creditable

considered as part of the revenues generated from the registered activity. In the computation of ITH, interest income from in-house financing shall not be

Phase 5-Brgys. Malusak, Caingin & Pooc, Sta. Rosa, Laguna) to ITH is not automatic as such project has to comply with the Specific Terms and Condition of its pertinent BOI Registration. Moreover, the entitlement of DDC Land, Inc. (Santa Rosa Garden Villas III

than those granted under E.O. 266. In this regard, under the terms and conditions of its BOI registration, DDC Land, Inc. (Santa Rosa Garden Villas III Phase 5-Brgys. Malusak, its business transactions. Thus, DDC Land, Inc. (Santa Rosa Garden Villas III Phase 5- Caingin & Pooc, Sta. Rosa, Laguna) was clearly granted 3-year ITH but such terms and conditions do not provide for any exemption from other taxes that it may be subject to on Brgys. Malusak, Caingin & Pooc, Sta. Rosa, Laguna) will remain subject to Value- Added Tax (VAT) and Documentary Stamp Tax (DST) on its sales of housing units pursuant to Sections 106 (A)(1)(a) and 196 of the Tax Code of 1997, as amended. (BIR Ruling No. 329-14 dated August 14, 2014) Furthermore, BOI-registered enterprises enjoy no tax exemption/privileges other

Hundred Pesos (P1,919,500.00) and below, or house and lot and other residential dwellings (P3,199,200.00) and below is VAT-exempt4.Thus, only the sales by DDC Land, Inc. valued at Three Million One Hundred Ninety Nine Thousand Two Hundred Pesos sale of residential lot valued at One Million Nine Hundred Nineteen Thousand Five In relation thereto, Section 109(1)(P) of the Tax Code of 1997 provides, that the

2 Movement of ITH period is subject to Art. 7 of E.O. 226 per BO! Specific Terms and Conditions No. 1 4 The increase in the threshold amount for the sale or fease of goods or properties or the performance of services 3 per HLURB License to Sell Nos. 5, the maximum selling price per House and Lot is covered by Section 109 (P),(Q) and (V) of the 1997 Tax Code took effect on January 1,2012, pursuant to Revenue Regulations No.16-2011 dated October 27,2011. dated Mav 25, 2015 issued for the project, Santa Rosa Garden Villas III Phase and per lot ony U

DDC Land, Inc./Sta. Rosa Garden Villas Ill Phase 5 Page 4 of 4 #442-2016 12-19m2016

Laguna) of housing units with selling price of not more than the aforementioned price (Santa Rosa Garden Villas II Phase 5-Brgys. Malusak, Caingin & Pooc, Sta. Rosa, ceiling shall be exempt from VAT. (BIR Ruling No. 329-14 dated August 14, 2014)

under E.O. 226, within thirty (30) days from the deadline for filing of tax returns and required to file its tax returns and pay its tax liabilities, on or before the deadline as provided under the 1997 Tax Code, as amended, using the electronic system for filing and payment of taxes of the BIR. Furthermore, DDC Land, Inc. shall file with the BOI a complete annual tax incentives report of its income-based tax incentives, value-added tax (VAT) and duty exemptions, deductions, credits or exclusions from the tax base, as may be provided payment of taxes. Pursuant to Section 4 of Republic Act (R.A.) No. 10708, DDC Land, Inc. is

agent for the government if its acts as employer and any of its employees received compensation income subject to compensation withholding tax, or if it makes payments to individuals or corporations, subject to the withholding taxes as source as required under Chapter XIII and Section 57 of the Tax Code of 1997, as amended and implemented by RR No. 2-98, as amended. It should be understood that DDC Land, Inc. shall be constituted as a withholding

month following the close of its accounting period of a Profit and Loss Statement and expenses incurred during the taxable year. Balance Sheet with the Annual Information Return under oath, stating its gross income and Likewise, DDC Land, Ine. is required to file on or before the 15TH day of the fourth

subiect to periodic examination by revenue enforcement officers of this Bureau for the has been granted tax exemption or tax incentives and its tax liability, if any, pursuant to Section 235 of the Tax Code of 1997, as amended. purpose of ascertaining whether it has been complying with the conditions under which it Finally, DDC Land, Inc.'s books of accounts and other pertinent records shall be

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.

Very truly yours,

Aaa

K-1-JAC Commissioner of Internal Revenue CAESAR R. DULAY 602595