BIR Ruling [DA-351-04]

June 25, 2004 BIR RULING [DA-351-04] Section 109 (w) BIR Ruling No. 5-99 Landworks Asia Incorporated Unit 2502-A, 25/F East Tower Philippine Stock Exchange Bldg. Exchange Road, Ortigas Center Pasig City, Metro Manila Attention: Ms. Ma. Charina S. Garcia Vice President/COO Gentlemen : This refers to your letter dated May 7, 2004 requesting for a ruling that the sale of housing units by CGE South Hills Ventures, Inc. valued at one million pesos (PhP1,000,000.00) and below is not subject to the 10% value-added tax (VAT); and authority to issue VAT-exempt official receipts. It is represented that Landworks Asia Incorporated is registered with the Bureau of Internal Revenue (BIR) under Certificate of Registration No. OCN3RC0000235949, that it is engaged in real estate development which offers quality residential products and amenities within an affordable price range; and that the residential units that you offer to your buyers are valued at a minimum selling price per unit of Three Hundred Fifty Thousand Pesos (PhP350,000.00). In reply, please be informed that Section 109(w) of the Tax Code of 1997 provides, viz : "SEC. 109. Exempt Transactions . The following shall be exempt from the value-added tax: xxx xxx xxx (w) Sale of real properties not primarily held for sale to customers or held for lease in the ordinary course of trade of business or real property utilized for low-cost and socialized housing as defined by Republic Act No. 7279, otherwise known as the Urban Development and Housing Act of 1992, and other related laws, house and lot and other residential dwellings valued at One million pesos (P1,000,000) and below. Provided, That not later than January 31st of the calendar year subsequent to the effectivity of this Act and each calendar year thereafter, the amount of One million pesos (P1,000,000) shall be adjusted to its present value using the Consumer Price Index, as published by the National Statistics Office (NSO)" In view of the foregoing, the sale of housing units by Landworks Asia Incorporated valued at one million pesos (PhP1,000,000.00) and below and which falls under the term "other residential dwellings" is exempt from VAT. Accordingly, this Office grants your request for an authority to issue VAT-exempt official receipts. 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 as null and void. aIcDCH Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group