BIR Ruling [DA-389-06]

June 23, 2006 BIR RULING [DA-389-06] 109; R.R. 16-2005; DA-298-2006 Gold Edge Assets Holding Corporation 3rd Floor, J&F Divino Building No. 967 Aurora Boulevard, Quirino Cubao, Quezon City Attention: Mr. Jacobo D. Divino, Jr. Director Gentlemen : This refers to your letter dated April 9, 2006 requesting for a ruling that the sale of residential lot by Gold Edge Assets Holding Corporation amounting to P500,000.00 is exempt from VAT pursuant to the provisions of Revenue Regulations No. 16-2005. It is represented that Gold Edge Assets Holding Corporation is a domestic corporation engaged in leasing, renting, purchasing, subdividing, developing and selling of real properties; and that it intends to sell a residential lot in the amount of P500,000.00. In reply, please be informed that Section 4.109-1(B)(p)(4) of Revenue Regulations (RR) No. 16-2005 provides, viz: "SEC. 4.109-1. VAT-Exempt Transactions . xxx xxx xxx (B) Exempt transactions . (1) Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from VAT: xxx xxx xxx (p) The following sales of real properties are exempt from VAT, namely: xxx xxx xxx (4) Sale of residential lot valued at One Million Five Hundred Thousand Pesos (P1,500,000.00) and below, or house & lot and other residential dwellings valued at Two Million Five Hundred Thousand Pesos (P2,500,000.00) and below where the instrument of sale/transfer/disposition was executed on or after July 1, 2005; Provided, That not later than January 31, 2009 and every three (3) years thereafter, the amounts stated herein shall be adjusted to its present value using the Consumer Price Index, as published by the National Statistics Office (NSO), Provided , further, that such adjustment shall be published through revenue regulations to be issued not later than March 31 of each year; If two or more adjacent residential lots are sold or disposed in favor of one buyer, for the purpose of utilizing the lots as one residential lot, the sale shall be exempt from VAT only if the aggregate value of the lots do not exceed P1,500,000.00. Adjacent residential lots, although covered by separate titles and/or separate tax declarations, when sold or disposed to one and the same buyer, whether covered by one or separate Deed of Conveyance, shall be presumed as a sale of one residential lot." Inasmuch as Gold Edge Assets Holding Corporation is primarily engaged in the development and sale of real properties such as the residential lot which has a selling price of P500,000.00, the same falls within the VAT-exempt transactions provided for under Section 4.109-1 or RR 16-2005, implementing Section 109(w) of the Tax Code of 1997, as amended by Republic Act No. 9337. cDTHIE Accordingly; the sale of a residential lot valued at P500,000.00 by Gold Edge Assets Holding Corporation is exempt from the payment of VAT pursuant to the provisions of Section 4.109-1(B)(p)(4) of Revenue Regulations No. 16-2005. (BIR Ruling No. DA-298-2006 dated May 6, 2006) 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service