VAT Imposed on the Business of Buying Land for Purposes of Developing it into a Subdivision

May 4, 1988 BIR RULING NO. 190-88 99 000-00 190-88 Gentlemen : This refers to your letter dated January 13, 1988 requesting, in effect, a ruling as to whether your client, Family Shelter Development Corporation (FSDC) is subject to the value-added tax effective January 1, 1988. It is represented that FSDC is a real estate developer engaged in the business of buying the land for the purpose of developing it into a subdivision; and that it plans to build houses in this subdivided lots and offer them for sale. In reply, please be informed that under Section 99 of the Tax Code as amended by E.O. No. 273, any person who, in the course of trade or business, sells, barters or exchanges goods, renders services, or engages in similar transactions and any person who imports goods shall be subject to the value-added tax imposed in Sections 100 and 102 of the same Code. Under Section 2(p) Revenue Regulations No. 5-87 implementing Section 99 of the Tax Code, "Goods" means any movable, tangible objects which are appropriable or transferable. Such being the case, FSDC is not subject to the value-added tax because the term "goods" does not include real properties sold by such developer. FSDC is subject only to the corporate income tax prescribed under Section 24(a) of the Tax Code as amended. aisadc Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner