BIR Ruling [DA-482-05]

November 25, 2005 BIR RULING [DA-482-05] 109; S-20-003-2003 Primenorth Development Corporation 2nd Floor, Tengco Bldg., F. Estrella Street Sto. Rosario City, Malolos Bulacan Attention: Ms. Ma. Charina S. Garcia EVP/COO Gentlemen : This refers to your letter dated October 5, 2005 requesting for a ruling relative to the VAT status of the sales of Primenorth Development Corporation (Primenorth). It is represented that Primenorth is primarily engaged in real estate selling of low cost housing where the majority of your contract price per sale is at minimum of P280,000.00; that Primenorth is registered with the Securities and Exchange Commission under Registration No. CS200315485 dated July 28, 2003 and with Tax Identification No. 226-187-696-000; and that the primary purpose for which Primenorth is incorporated is "to own, use, improve, develop, subdivide, sell, exchange, lease and hold for investment or otherwise, real estate of all kinds, including buildings, houses, apartments and other structures." In reply, please be informed that Section 4.109-1(B)(p)(2) of Revenue Regulations 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 (2) Sale of real properties utilized for low-cost housing as defined by RA No. 7279, otherwise known as the "Urban Development and Housing Act of 1992" and other related laws, such as RA No. 7835 and RA No. 8763. IAcTaC "Low-cost housing" refers to housing projects intended for homeless low-income family beneficiaries, undertaken by the Government or private developers, which may either be a subdivision or a condominium registered and licensed by the Housing and Land Use Regulatory Board/Housing (HLURB) under BP Blg. 220, PD No. 957 or any other similar law, wherein the unit selling price is within the selling price ceiling per unit of P750,000 under RA No. 7279, otherwise known as the "Urban Development and Housing Act of 1992" and other laws, such as RA No. 7835 and RA No. 8763." Inasmuch as Primenorth is primarily engaged in the sale of real property intended for low cost housing, the majority of the contract price of which is at minimum of P280,000.00, the same falls within the VAT-exempt transactions provided for under Section 4.109-1 of RR 16-2005, implementing Section 109(w) of the Tax Code of 1997, as amended by RA 9337, provided that the same is within the selling price ceiling per unit of P750,000.00. 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