Taxpayer Engaged in Real Estate Leasing Subject to 10% VAT

February 11, 1998 BIR RULING NO. 019-98 100-000-00-019-98 Ms. Jocelyn P. de Leon No. 958 Sisa Street Sampaloc, Manila M a d a m : This refers to your letter dated March 11, 1997 stating that you have a client engaged in real estate leasing; and that they have an existing property in Alabang which they intend to sell in the future. Based on the foregoing representations, you are now requesting for a ruling on the following queries: 1. Whether or not the sale of said property is subject to value-added tax. 2. If your client is a CREBA member, will they be exempted from paying the value-added tax? prLL In reply, please be informed that your above queries are answered as follows: 1. Under Sec. 4. 100-1 of Revenue Regulations No. 7-95 otherwise known as the Consolidated Value-Added Tax Regulations, sale of real properties held primarily for sale to customers or held for lease in the ordinary course of trade or business of the seller shall be subject to 10% VAT based on the gross selling price. For this purpose, "gross selling price" shall mean the consideration stated in the sales documents or the zonal value whichever is higher; provided, however, that in the absence of applicable zonal values, gross selling price refers to the market value shown in the latest tax declaration or the consideration whichever is higher. Such being the case, your client engaged in real estate leasing shall be subject to the 10% VAT should their intention to sell their real property in Alabang materialize pursuant to Section 4-100-1 of Revenue Regulations No. 7-95. 2. Your second query is answered in the negative, being a CREBA member would only affirm the fact that your client is engaged in the real estate business and therefore, would fall within the purview of those whose sale of realty are subject to the 10% VAT. Very truly yours, (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue