BIR Ruling No. 283-2016

REPUBLICOF THE PHILIPPINES

Je BUREAU OF INTERNAL REVENUE DEPARTMENT OF FINANCE

Quezon City

Section 20 of RA 7279

BIR Ruling No.063-14

#283-2016

6-27-2016

Suite 21, 3J Heights Bldg No. 35 Visayas Avenue Diliman, Quezon City Verzontal Builders, Inc.

Attention: Geo Salvatorre Vinci B. Duran Authorized Managing Officer

Gentlemen:

known as the "Urban Development and Housing Act of 1992" Certificate of Tax Exemption for the two (2) socialized housing projects, Magalona Yolanda Permanent Housing Project, located at Brgy. Sto. Nino, E.B. Magalona, Negros Occidental (Sites 2 and 3), pursuant to Republic Act (R.A.) No.7279, otherwise Heights 2 and Magalona Heights 3, under the National Housing Authority (NHA)'s This refers to your letter dated February18, 2015 requesting issuance of

according to both contracts, the scope of works for the above-projects includes "Survey Works, Earthworks, Road Works, Drainage Works, Water System, Electrical Power Package for Magalona Heights 3 for a contract price of Lines, Miscellaneous Works and Housing Construction. Inc. has committed to deliver 260 units (House and Lot Package) for Magalona Heights 2 for a contract price of I Contract for the Procurement of House and Lot Packages Magalona Heights 3, Brgy Sto. Nifio, E.B. Magalona, Negros Occidental (Site 3), in which Verzontal Builders. February 17, 2015, the NHA and Verzontal Builders, Inc. executed two (2) separate contracts, namely: 1). Contract for the Procurement of House and Lot Packages Magalona Heights 2, Brgy. Sto. Nino, E.B. Magalona, Negros Occidental (Site 2); and Commission (SEC) with Company Registration No. is a domestic corporation duly registered with the Securities and Exchange Documents submitted show that Verzontal Builders, Inc. (TIN: and 240 units (House and Lot : and that on and that

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

"Sec. 20. Incentives for Private Sector Participating in

participation in socialized housing and further reduce the Socialized Housing. - To encourage greater private sector

cost of housing units for the benefit of the underprivileged and homeless, the following incentives shall be extended to the private sector:

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"d) Exemption from the payment of the following:

( Project-related income taxes; (2 Capital Gains Tax on raw lands used for the

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

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underprivileged and homeless citizens undertaken by the Government or the public sector, are entitled to exemption from income tax on revenues directly derived therefrom. Considering that Verzontal Builders, Inc. is a project contractor whose only, including sites development for socialized housing projects, intended for the services have been engaged by the NHA to undertake the construction of 260 Housing Based on the foregoing, housing projects covering houses and lots or homelots

Units with its necessary construction components in Magalona Heights 2, Brgy. Sto. Nino, E.B. Magalona, Negros Occidental (Site 2), and 240 Housing Units with its necessary construction components in Magalona Heights 3, Brgy. Sto. Ninio, E.B. Magalona, Negros Occidental (Site 3), which are both under the socialized housing program of the NHA pursuant to R.A. 7279 in connection with its Yolanda Permanent Housing Project. the income directly realized by Phintecstar Construction, Incorporated from the construction of the 260 and 240 (or a total of 500) Housing Units

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shall be exempt from project-related income taxes. (BIR Ruling No. 063-14 dated (House and Lot Packages) with its necessary construction components in Magalona Heights 2 and 3, Brgy.Sto. Nino, E.B. Magalona, Negros Occidental Sites 2 and 3) February 19,2014)

the 260 and 240 (or a total of 500) Housing Units (House and Lot Packages) with its Moreover, pursuant to Section 20 (d)(3) of R.A. No. 7279, the construction of

necessary construction components in Magalona Heights 2 and 3.Brgy.Sto.Nino,E.B. Magalona, Negros Occidental (Sites 2 and 3, by Verzontal Builders, Inc.shall be exempt from VAT.However, the purchases of goods/articles by Verzontal Builders.

housing project, since VAT is an indirect tax which can be passed on by the seller of the goods/services. Inc. shall be subject to VAT, even if the said purchases are to be used for the socialized

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.

Commissioner of Internal Revenue KIM S.JACINTO-HENARES

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