BIR Ruling [DA-147-03]

May 6, 2003 BIR RULING [DA-147-03] 20 (d) RA 7279 S-20-059-2000 RMAJ Construction 2984 Lapu-Lapu St., San Jose Occidental Mindoro Attention: Mr. Vladimir T. de Lara Owner/Gen. Manager Gentlemen : This refers to your letters dated September 10, 2002 and March 11, 2003 requesting for exemption from the payment of value-added tax (VAT) pursuant to Section 20 of Republic Act (RA) No. 7279, otherwise known as the "Urban Development and Housing Act of 1992". It appears that RMAJ Construction is a contractor for the land development of San Jose Resettlement Project located at Brgy. Bubog, San Jose, Occidental Mindoro; that it is a socialized housing project of the National Housing Authority (NHA) and is intended to benefit the urban poor families and informal settlers residing along the coastal areas of Sitio Riverside, Brgy. IV, San Roque, San Jose, Occidental, Mindoro; and that in support of your request you submitted to this Office the Contract you executed with NHA and other pertinent documents. In reply, please be informed that pursuant to Section 20 of R.A. No. 7279; pertinent portion of which reads: "Sec. 20. Incentives for Private Sector Participating in Socialized Housing . To encourage greater private sector participation in socialized housing and further reduce the cost of housing units for the benefit of the underprivileged and homeless, the following incentives shall be extended to the private sector. xxx xxx xxx "(d) Exemption from the payment of the following: "(1) . . . "(2) . . . "(3) Value-added tax for the project contractor concerned;" as project contractor of NHA, RMAJ Construction is exempt from the payment of VAT on its gross receipts from the said project. However, its purchases of goods/articles shall be subject to VAT, even if the said purchases are to be used for the socialized housing project, since VAT is an indirect tax which can be passed on by the seller of the goods/services. ( BIR Ruling No. S-20-031-2001 dated October 10, 2001 ) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. SETaHC Very truly yours, Commissioner of Internal Revenue By: (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service