Correct Rate of Creditable Withholding Tax to Which Inventory is Subject to under Revenue Regulations No. 12-94

December 5, 1994 BIR RULING NO. 168-94 50 (b) 000-00 168-94 Calmar Land Development Corporation Calmar Building, Maharlika Highway Barangay Kanlurang Mayan Lucena City Attention: Mr . Reynaldo O . Calayan, Jr . President & CEO Gentlemen : This refers to your letter dated August 5, 1994 stating that your company supports the National Shelter Program of our government by providing affordable lots and dwelling units whose selling price is not more than P500,000.00; that your residential subdivision which was approved under P.D. No. 957 is duly registered with the Housing and Land Use Regulatory Board (HLURB); and that in your understanding, all transactions involving real estate whether held as ordinary or capital assets, are covered by certain taxes being levied by this Office. llcd Based on the foregoing representations, you now request for a ruling as to what rate of creditable withholding tax your aforesaid inventory is subject to under Revenue Regulations No. 12-94. 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 of 1.5% 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 than 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 HLURB as engaged in Socialized Housing projects under R.A. 7279; (b) the selling price of the house and lot or the lot only is not over P500,000.00, and (c) the seller/transferor is habitually engaged in the real estate business. Such being the case, and since it appears that you are a corporation habitually engaged in the real estate business registered with the HLURB under P.D. No. 957 and whose lots and dwelling units are being sold for not more than P500,000.00, this Office is of the opinion, as it hereby holds, that the sale of your abovementioned inventory is subject to the creditable withholding tax prescribed under Revenue Regulations No. 12-94 at the rate of one and one-half percent (1.5%). It is, however, understood that the Certificate Authorizing Registration (CAR) shall only be issued after it is established upon proper verification by the Revenue District Officer (RDO) concerned that, considering the rules on valuation of real property, the actual selling price per sale transaction of the lots and dwelling units or the lot only in this case does not really exceed P500,000.00. aisadc Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue