Applicability of 0% or 2.5% Creditable Withholding Tax on the Sales of Subdivision Lot/Unit at Beverly Hills Subdivision

December 18, 1992 BIR RULING NO. 363-92 50 (b) 170-92 363-92 Rogelio, Villanueva, Sarita & Associates 7/F RGV Building 5470 Pres. Osmea Highway Makati, Metro Manila Attention: Atty . Orlando G . Rogelio Gentlemen : This refers to your letter dated March 21, 1992 asking for clarification as to the applicability of 0% or 2.5% creditable withholding tax on the sales of subdivision lot/unit at Beverly Hills Subdivision located at Dolores, Taytay, Rizal. cdll It appears that your client, Top Services, Inc., is a domestic corporation engaged in the real estate business; that it is a member of CREBA in good standing; that its project at Beverly Hills Subdivision Phase III located at Dolores, Taytay, Rizal was duly covered by Certificate of Registration from the National Housing Authority (NHA) in conformity with Presidential Decree No. 957; that for the last ten (10) years it has sold every subdivision lot to various lot buyers on an installment basis; that the gross contract and/or selling price of each lot as indicated in the annexed documents does not exceed P500,000.00; and that the balance of the purchase price of each lot that remained uncollected as of January 1, 1990 does not exceed P500,000.00. In reply, please be informed that under paragraph nos. 2 and by Revenue Memorandum Circular No. 9-90 as amended by Revenue Memorandum Circular No. 16-90 clarifying some pertinent provisions of Revenue Regulations No. 12-89 as amended by Revenue Regulations No. 1-90 implementing Section 50 (b) of the Tax Code, as amended, in order to remove the bias against Low-Cost housing projects registered under PD No. 957 and to simplify tax administration all sales, exchanges or transfers of real property on or after March 1, 1990 shall be subject to zero (0%) percent, regardless of the law under which the project is registered, provided that the consideration does not exceed P500,000. In other words, it is the selling price or consideration (and not the law under which a project was approved) that determines whether or not a transaction is socialized/low cost in nature. Moreover, to be entitled to the lower withholding tax rate of 0% or 2.5%, the presentation of the Certificate of Registration and License To Sell for a subdivision or condominium project issued by the Housing and Land Use Regulatory Board (HLURB) shall be sufficient proof for purposes of the required Housing and Urban Development Coordinating Council (HUDCC)/HLURB Certification in the regulations (Revenue Regulations No. 12-89 as amended by Revenue Regulations No. 1-90). Such being the case, and since your client's residential subdivision project at Beverly Hills Subdivision located at Dolores, Taytay, Rizal is registered with the National Housing Authority under Certificate of Registration No. RS-1793, and was issued with the corresponding License to Sell under License to Sell No. LS-1711 coupled with the sale thereof ranging from P55,440 to less than P500,000 per subdivision lot/unit, this Office is therefore, of the opinion as it hereby holds that the sale of your client's subdivision lot/unit at Beverly Hills Subdivision at Dolores, Taytay, Rizal that are within the range of P55,440 to less than P500,000 as verified to be within such price range by the Revenue District Officer where the property is located, is subject to the 0% creditable withholding tax imposed under Revenue Regulations No. 1-90 implementing section 50 (b) of the Tax Code. This renders inapplicable the use of the zonal valuation as well as the revised zonal valuation of the aforesaid projects as tax base in computing the creditable withholding tax on your sale thereof. aisadc Very truly yours, JOSE U. ONG Commissioner of Internal Revenue