Whether Molino Homes, Inc. is Subject to the 2.5% Withholding Tax on Certain Sales Transactions

August 31, 1994 BIR RULING NO. 132-94 50 (b) 000-00 132-94 Molino Homes, Inc. 1226 G. Apacible St. Paco, Metro Manila Attention: Mr . George S . Go President Gentlemen : This refers to your letter dated July 18, 1994 stating that your company is engaged in low-cost/socialized housing under BP No. 220 and RA No. 7279 with existing project at Salitran, Dasmarias, Cavite; and that you have sales transactions involving twenty (20) accounts pending with our BIR District Office at Trece Martirez, Cavite, which is allegedly being subjected to the expanded withholding tax of 2.5%, because it was filed between July 1 to July 15, 1994. cdt In connection therewith, you are requesting a ruling on the following: (1) Whether or not, you are subject to the 2.5% withholding tax on the aforesaid sales transactions; and (2) Whether or not you are exempt from the expanded withholding tax under Revenue Regulations No. 12-94. In reply thereto, please be informed that Section 7 of Revenue Regulations No. 12-94 amending Revenue Regulations No. 6-85 otherwise known as The Expanded Withholding Tax Regulations provides, viz: "Sec. 7. Effectivity . The provisions of Revenue Regulations No. 8-94 notwithstanding, these Regulations shall take effect fifteen days after publication in the Official Gazette or in any newspaper of general circulation whichever shall come first". Revenue Regulations No. 12-94 was published in the July 1, 1994 issue of the Manila Bulletin, a newspaper of general circulation, thus, it is effective on July 16, 1994. For sales transactions prior to July 16, 1994, the provisions of Revenue Regulations No. 1-90 as amplified by Revenue Memorandum Circular No. 7-90 shall apply. In effect, Revenue Regulations No. 6-94 as amended by Revenue Regulations Nos. 7-94 and 8-94 was not enforced. Such being the case, and since you are registered with, and certified to as engaged in low-cost housing projects under Batas Pambansa Blg. 220 by the Housing and Land Use Regulatory Board (HLURB), your sales transactions involving low cost housing units, where the consideration for the sale of the lot or house and lot per transaction does not exceed P500,000.00 for the period from July 1 to July 15, 1994 shall be subject to 0% percent pursuant to Revenue Regulations No. 1-90 as amplified by Revenue Memorandum Circular No. 7-90. Moreover, pursuant to Section 4(b)(1) of Revenue Regulations No. 6-85 as amended by Revenue Regulations No. 12-94, sales of real property by a corporation which is registered with and certified by the HLURB as engaged in socialized housing projects pursuant to Republic Act No. 7279 otherwise known as the Urban Development and Housing Act of 1992 and where the selling price of the house and lot or only the lot does not exceed P150,000.00 or at such adjusted amount of selling price for socialized housing as may later be determined and adopted by the HLURB pursuant to said law, shall not be subject to the expanded withholding tax. However, if you are not engaged in socialized housing projects under Republic Act No. 7279, then beginning July 16, 1994, your sales transactions shall be subject to the expanded withholding tax under Revenue Regulations No. 12-94. cdtech Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue