Real Estate Dealer and Lessor is Subject to the 2.5% Creditable Withholding Tax on Its Sale Transactions

August 31, 1994 BIR RULING NO. 130-94 50 (b) 000-00 130-94 Chamber of Real Estate & Builders Association, Inc. 3/F, CREBA Center, Don Alejandro Roces Ave. Corner South "A" Street, Quezon City Attention: Mr . Porthes P . Abra Jose National President Gentlemen : This refers to your letter dated July 27, 1994 stating that one of your members, JEB Real Estate Dealer and Lessor (JEB), failed to satisfy one of the conditions provided under Revenue Regulations No. 1-90, which is the license to sell issued by the Housing and Land Use Regulatory Board (HLURB); that as a consequence thereof, the issuance of the Certificate Authorizing Registration to your said member has been held pending the submission of authority from this Office to avail of the 2.5% creditable withholding tax on its sale of properties as follows: cdt Contract Price Unit 35-A P1,100,000.00 Unit 35-D 758,284.00 that the documents relative to the said sale transactions of JEB are with Revenue District Office No. 28, Novaliches, Quezon City since June 30, 1994; and that the buyers thereof are pressuring JEB for the release of their titles. Based on the foregoing representations, you now request for a ruling to the effect that your member, JEB, is subject to the 2.5% creditable withholding tax on its aforesaid sale transactions notwithstanding its failure to present a License To Sell issued by the HLURB. In reply, please be informed that since it appears that JEB is not a subdivision developer but a real estate dealer and lessor, and that the sale transaction in question took place at the time when Revenue Regulations No. 1-90 was still in force, this Office is of the opinion as it hereby holds that JEB is subject only to the lower rate of 2.5% creditable withholding tax imposed under Revenue Regulations No. 1-90, implementing Section 50(b) of the Tax Code, as amended, on its aforementioned sale transactions because JEB need not be registered with the HLURB for purposes of the issuance of a License To Sell since HLURB does not issue License To Sell if the applicant is not a subdivision developer. This ruling shall serve as an authority for the Revenue District Officer of Revenue District Office No. 28, Novaliches, Quezon City to issue the corresponding Certificate Authorizing Registration (CAR) upon payment by the taxpayer of the 2.5% creditable withholding tax on said sale transactions. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue