Whether Palvic Realty Development Corp. is Liable to Pay only 1.5% Expanded Withholding Tax on the Aforesaid Sale of Your Real Properties

April 24, 1995 BIR RULING NO. 078-95 50 (b) 000-00 078-95 Palvic Realty Development Corporation Suite 1622, 16th Floor Tytana Plaza Bldg. Plaza Lorenzo Ruiz, Binondo, Manila Attention: Mr . Vicente C . See President Gentlemen : This refers to your letter dated November 24, 1994 stating that you are a corporation habitually engaged in buying and selling real properties within the Housing and Land use Regulatory Board (HLURB) as engaged in Socialized Housing Project under Republic Act No. 7279; that you sold three (3) of your real properties situated at Gandara St., Manila; that your real properties are all parking lots within a condominium building; that the consideration appearing on the Deeds of Absolute Sale executed for the purpose are: P163,750.00, P110,250.00 and P117,125.00; that you submitted the pertinent documents relative to the said sale transaction to Revenue District Office No. 30 situated at Binondo, Manila; that you were surprised upon being informed that you will pay 5% expanded withholding tax instead of 1.5% on the said sale transactions; and that you are of the opinion that you are liable to pay only 1.5% expanded withholding tax on the said sale of your realties pursuant to Revenue Regulations No. 12-94. Based on the foregoing representations and documents submitted, you are now requesting for a ruling to the effect that you are liable to pay only 1.5% expanded withholding tax on the aforesaid sale of your real properties. In reply, please be informed that under Section 1(j)(1) of Revenue Regulations No. 6-85 as amended by Revenue Regulations No. 12-94 implementing Section 50(b) of the Tax Code, as amended, there shall be withheld a creditable income tax at the rate of 1.5% based on the gross selling price or total amount of consideration or its equivalent paid to the seller/owner for the sale, exchange or transfer of real property, other then capital asset, by an individual, estate, trust, trust fund or pension fund or real property, whether held as capital or ordinary asset, by a corporation (a) not registered with the Housing and Land Use Regulatory Board (HLURB) as engaged in Socialized Housing projects under R.A. No. 7279; (b) the selling price of the house and lot or the lot only is not over P500,000.00; and (c) the seller/transfer is habitually engaged in the real estate business. Such being the case, and since you are a corporation habitually engaged in the real estate business; not registered with the HLURB as engaged in Socialized Housing project under R.A. No. 7279 and the selling price of your aforesaid realties did not exceed P500,000.00 per lot, this Office is of the opinion as it hereby holds that the said sale of your real properties is subject only to the 1.5% creditable withholding tax imposed under Sections 1(j)(1) of Revenue Regulations No. 6-85 as amended by Revenue Regulations No. 12-94 implementing Section 50(b) of the Tax Code, as amended. cdtech Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue