BIR Ruling [DA-149-99]

March 11, 1999 BIR RULING [DA-149-99] Ala Enterprises National Highway, Barangay Nueva San Pedro Laguna Attention: Mr . Alfredo L . Aonuevo Gentlemen : This refers to your letter dated January 27, 1999 requesting for exemption from the payment of value-added tax and project-related income taxes for engaging in the construction and development of socialized housing considered as part of the government's socialized housing project. LLjur Documentary evidence submitted to this Office disclosed that three (3) Letters of Award were issued in your favor by Filinvest Land Incorporated, as owner/developer for the construction of socialized housing projects in Cavite as follows: Project Location No. of Units Amount Sunny Brooke II General Trias. 181 units P58,658.23/unit Cavite Belvedere Town General Trias, 61 units 56,009.13/unit Phase III-B Cavite Belmont Project Gen. Trias, Cavite 80 units 61,927.00/unit that the above-mentioned projects are registered and covered under R.A. No. 7279 as approved by the Housing and Land Use Regulatory Board (HLURB); that correspondingly, Filinvest Land Incorporated issued in your favor Notices to Proceed with the construction within seven (7) calendar days from receipt of the notices and complete the same within forty-five (45) calendar days; and that in support of your request, you submitted to this Office the following documents: 1) Certificates of Registration from the HLURB; 2) Three (3) License to Sell; 3) Notices to Proceed; 4) Letters of Award; and 5) Development Permit. 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. Project-related income taxes; 2. Capital gains tax on raw lands used for the project; 3. Value-added tax for the project contractor concerned; xxx xxx xxx" Based on the foregoing representations, this Office is of the opinion as it hereby holds that Ala Enterprises is exempt from the payment of project-related income taxes and value-added tax as the project contractor for the construction of socialized housing at Sunny Brooke II, Belvedere Town Phase III-B and Belmont Projects all located at General Trias, Cavite. However, purchases of goods/articles by Ala Enterprises, as project contractor shall be subject to value-added tax, even if the said purchases are to be used for the socialized housing project. (BIR Ruling No. 393-93 dated October 1, 1993; UN414-95 dated November 23, 1995) 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)