BIR Ruling No. 005-2023

BUREAU OF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES National Office Building DEPARTMENT OF FINANCE Quezon City

Republic Act No.7279 BIR Ruling No.332-2021 VAT-005-2023 JAN 202023

Brgy.Culiat,District 6 Quezon City Lot 644 C4-F Visayas Avenue ARR CONSTRUCTION

Attention: Romeo R. Aniciete General Manager Gentlemen:

1P of the National Internal Revenue Code of 1997Tax Code),as amended. of the sale of house and lot units with values within the VAT threshold under Section 109 This refers to your request for clarification on the value-added tax (VAT) exemption

delivery of completed house and lot units for NHA's various socialized housing projects which have been previously issued with Certificate of Tax Exemptions (CTEsto wit: 3Deeds of Absolute Sale in favor of the National Housing Authority (NHA for the Based on the documents submitted, it is shown that ARR Construction executed three

3. St. Augustine Homes Resettlement Project located in Sitio San Berga, Sapang. 2. St.Ildephonsus Village Resettlement Project located in Brgy. Anyatam. San I. Casa San Miguel Housing Project located in Brgy. San Juan de Valdez, San Jose. Maragul,Tarlac City. Ildefonso,Bulacan;and Tarlac:

In reply, please be informed that Section 20 (d) of RA No. 7279 reads:

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

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CTE Nos. Dated June 10. 2019. July 30, 2019 and August 2. 2019, respectively and C

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(d) Exemption from the payment of the following:

(2) Capital gains tax on raw lands used for the project: (1) Project-related income taxes:

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Section 3(r of RA No.7279 defines socialized housing as follows

"SEC. 3. Definition of Terms. - For purposes of this Act:

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

On the other hand, Section 109P of the Tax Code,as amended.provides:

from the value-added tax: Subsection (2) hereof, the following transactions shall be exempt "SEC. 109.Exempt Transactions - Subject to the provisions of

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pesos (P2.000.000): xxx" (Emphasis supplied) Provided, That beginning January 1, 2021, the VAT exemption shall only apply to sale of real properties not primarily held for sale to business, sale of real property utilized for socialized housing as defined by Republic Act No. 7279, sale of house and lot, and other residential dwellings with selling price of not more than Two million or held for lease in the ordinary course of trade or business or real property utilized for low-cost and socialized housing as defined by Two million five hundred thousand pesos (P2,500,000) and below. customers or held for lease in the ordinary course of trade or (P) Sale of real properties not primarily held for sale to customers Republic Act No.7279,otherwise known as the Urban Development and Housing Act of 1992, and other related laws,residential lot valued at One million five hundred thousand pesos (P1,500,000) and below, house and lot, and other residential dwellings valued at

of housing units for the benefit of the underprivileged and homeless, including the sector to encourage their participation in socialized housing and to further reduce the cost Based on the afore-quoted provisions, there are tax incentives available to private

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exemption from project-related income taxes and capital gains tax on raw lands used for the project.

2021, the exemption from VAT shall only apply to sale of house and lot and other than P3,199,200.003 per house and lot package; provided further, that beginning January 1. residential dwellingst with selling price of not more than P3,199,200.00. VAT the sale of house and lot and other residential dwellings with selling price of not more On the other hand.Section 1091P of the tax Code,as amended,exempts from

pursuant to Section 20d1 of RA No.7279 and Section 109P of the Tax Code,as Project are exempt from project-related income taxes,creditable withholding tax and VAT by ARR Construction in favor of NHA for the delivery of completed house and lot units for NHA's various socialized housing projects,namely,Casa San Miguel Housing Project. St. Ildephonsus Village Resettlement Project. and St. Augustine Homes Resettlement In view of the foregoin, it is clarified that the Deeds of Sale which were executed

amended.

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.

RO YEODLUMAGUI, JR

K-1 FFR Commissioner of Internal Revenue 001607

Sale of lot only,regardless of the price,shall be subject to VAT starting January 1.2021 pursuant to RA No.10963 3As adjusted using the 2010 Consumer Price Index values per revenue Regulations RRNo.8-2021 dated June 11,2021