BIR Ruling [DA-132-06]

March 17, 2006 BIR RULING [DA-132-06] R.A. No. 7279; 071-98 Ong, Ordoez and Associates 8/F 111 Paseo de Roxas Bldg. 111 Paseo de Roxas cor Legaspi St. Legaspi Village, Makati City Attention: Ms. Ma. Theresa Cruz Authorized Representative Gentlemen : This refers to your letter dated February 23, 2006 stating that Gold Triangle Properties, Inc., a real property developer had purchased a parcel of land from the National Housing Authority (NHA). You are, in effect, requesting for an opinion that the aforestated sale is exempt from payment of fees and charges of any kind whether local or national and that all documents or contracts executed by and in favor of the said agency shall also be exempt from the payment of documentary stamp tax and registration fees under the provisions of Republic Act (RA) No. 7279, otherwise known as the Urban Development and Housing Act of 1992. In reply, please be informed that: "Sec. 19. Incentives for the National Housing Authority . The National Housing Authority, being the primary government agency in charge of providing housing for the underprivileged and homeless, shall be exempted from the payment of all fees and charges of any kind, whether local or national, such as income and realty taxes. All documents or contracts executed by and in favor of the National Housing Authority shall also be exempt from the payment of documentary stamp tax and registration fees, including fees required for the issuance of transfer certificates of title." Under the foregoing provisions, NHA enjoys exemption from all forms of taxation. Thus, at the time of the sale of the above-stated property NHA was not liable to pay any kind of taxes, fees and charges. Section 19 of RA 7279, gives incentives to the NHA, as the entity tapped by the National Government to carry out the purposes of RA 7279, in the form of exemptions from the payment of all national taxes, such as income tax and the corresponding creditable withholding tax or the capital gains tax, including exemptions from documentary stamp taxes upon documents or contracts executed by and in favor of the NHA. (BIR Ruling No. 071-98 dated May 25, 1998) EaHIDC In view of the foregoing, NHA is exempt from the payment of creditable withholding tax imposed under Section 57(B) of the Tax Code of 1997, as implemented by Section 2.57.2(J) of Revenue Regulations No. 2-98, or capital gains tax under Section 27(b)(5) of the Tax Code of 1997, whichever is applicable on its sale of the afore-mentioned property. NHA, is likewise is exempt from the payment of the documentary stamp tax imposed under Section 196 of the Tax Code of 1997. It is to be noted that under RMC 42-2001 dated October 5, 2001, the exemption from documentary stamp tax of NHA in connection with any of its socialized housing project extends to the other party (either seller or buyer) that deals or transacts with the NHA. Consequently, Gold Triangle Properties, Inc. being the buyer thereof, shall also be exempted from the payment of documentary stamp tax under Section 196 of the same Tax Code. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service