BIR Ruling No. 422-13

November 14, 2013 BIR RULING NO. 422-13 RA No. 9994; RMC No. 65-2012; RMC No. 9-2013; RR No. 7-2010; RR No. 8-2010 DMCI Homes Property Management Corporation DMCI Homes Corporate Center, 1321 Apolinario St., Brgy. Bangkal, Makati City 1233 Attention: Ms. Ana Maria A. Ferrer VP-DPMC Madams : This refers to your letter dated May 15, 2013 requesting for a ruling or clarification on the applicability on whether the exemption provided for in Republic Act No. 9994, otherwise known as " The Expanded Senior Citizens Act of 2010 " applies to the association dues, assessments and other charges paid by Senior Citizens to condominium corporations. It is represented that DMCI Property Management Corporation handles and/or supervises the property management of the following condominium corporations and homeowners' associations: 1. Acacia Avenue Association, Inc. 2. Accolade Place Condominium Corporation 3. Bonifacio Heights Residences Condominium Corporation 4. Cedarcrest Condominium Corporation 5. Cypress Towers Condominium Corporation 6. Dansalan Gardens Condominium Corporation 7. East Ortigas Mansion Condominium Corporation 8. East Raya Gardens Condominium Corporation 9. Hampstead Gardens Condominium Corporation 10. Illumina Residences Manila Condominium Corporation 11. Magnolia Place Condominium Corporation 12. Manors at Celebrity Place Condominium Corporation SEHDIC 13. Maricielo Villas Condominium Corporation 14. Mayfield Park Residences 15. Ohana Place 16. Palm Grove 17. Rainbow Ridge Residences 18. Raya Garden 19. Rhapsody Residences 20. Riverfront Residences 21. Rosewood Pointe Residences 22. Rosewood Pointe Residences 23. Royal Palm Residences 24. Siena Park Residences 25. The Redwoods 26. Tivoli Garden Residences 27. Vista De Lago Villas Condominium Corporation 28. Mahogany Place 3 Homeowners' Association, Inc. 29. Willow Park Homeowners' Association, Inc. RMC Nos. 65-2012 and 9-2013 clarifies the taxability of association dues, membership fees, and other assessments/charges collected by condominium corporations and homeowners' associations, respectively, from its members. On the other hand, pursuant to Republic Act No. 9994, otherwise known as " The Expanded Senior Citizens Act of 2010 ", Section 4 and 10 of RR No. 07-2010, as amended by RR No. 08-2010, provides that sales of any goods and services to Senior Citizens under Sections 4 of the Regulations shall be discounted at twenty percent (20%) and are exempt from the imposition of VAT. Sections 4 and 10 of RR No. 7-2010, as amended, provides: "SEC. 4. Grant of Discounts to Senior Citizens. All establishments, supplying any of the following goods and services, as specified in the Act to Senior Citizens, for their exclusive use and enjoyment or availment, shall give a discount of twenty (20%) per cent. The granting of discount herein mentioned shall apply to the sale of the following goods and services: aSDHCT a. Medicines, including influenza and pneumococcal vaccines, and such other essential medical supplies, accessories and equipment to be determined by the Department of Health (DOH). a.1. On all drug stores, hospital pharmacies, medical and optical clinics and similar establishments dispensing medicines, the discount for sales of drugs/medicines shall be subject to the Guidelines to be issued by the Bureau of Food and Drugs, Department of Health (BFAD-DOH), in coordination with the Philippine Health Insurance Corporation (PHILHEALTH). For this purpose, the term "medicines" shall refer to both prescription and nonprescription medicines, and articles approved by the BFAD-DOH, which are intended for use in the diagnosis, cure, mitigation, treatment or prevention of disease in man; but do not include food and devices or their components, parts, or accessories. b. On the professional fees of attending physician/s in all private hospitals, medical facilities, outpatient clinics and home health care services, where the discount shall be based on the compensation for services charged from the Senior Citizen. c. On professional fees of licensed professional health workers providing home health care services as endorsed by private hospitals or employed through home health care employment agencies, where the discount shall be based on the fees charged from the Senior Citizen. d. On medical and dental services, diagnostic and laboratory fees in all private hospitals, medical facilities, outpatient clinics, and home health care services, in accordance with the rules and regulations to be issued by the DOH, in coordination with the Philippine Health Insurance Corporation (PhilHealth). d.1. " Medical services " refers to hospital services, professional services of physicians and other health care professionals and diagnostic and laboratory tests that are necessary for the diagnosis or treatment of an illness or injury. d.2. " Dental services " refers to oral examination, cleaning, permanent and temporary filling extractions and gum treatments, restoration, replacement or repositioning of teeth, or alteration of the alveolar or periodontium process of the maxilla and the mandible that are necessary for the diagnosis or treatment of an illness or injury. DcIHSa d.3. " Home health care service " refers to health or supportive care provided to the Senior Citizen patient at home by licensed health care professionals to include but not limited to, physicians, nurses, midwives, physical therapists and caregivers. e. f. On actual transportation fare for domestic air transport services and sea shipping vessels and the like, based on the actual fare and advanced booking. g. On the utilization of services in hotels and similar lodging establishments, restaurants and recreation centers. g.1. For hotels and similar lodging establishments, the discount shall be for room accommodation and other amenities offered by the establishment, such as, but not limited to, massage parlor, sauna bath, food, drinks and other services offered. g.2. For this purpose, the term "hotel/hostel" shall refer to the building, edifice or premises or a completely independent part thereof, which is used for the regular reception, accommodation or lodging of travelers and tourists, and the provision of services incidental thereto, for a fee. g.3. " Lodging establishment " shall refer to a building, edifice, structure, apartment or house including tourist inn, apartelle, motorist hotel and pension house engaged in catering, leasing or providing facilities to transients, tourists or travelers. The following are considered as lodging establishments: g.3.1. Tourist Inn a lodging establishment catering to transients, which does not meet the minimum requirement of an economy hotel. g.3.2. Apartelle a building or edifice containing several independent and furnished or semi-furnished apartments, regularly leased to tourists and travelers for dwelling on a more or less long-term basis and offering basic services to its tenants, similar to hotels. DSIaAE g.3.3. Motorist Hotel any structure with several separate units, primarily located along the highway, with individual or common parking space, at which motorists may obtain lodging and in some instance, meals. g.3.4. Pension House a private, or family-operated tourist boarding house, tourist guest house or tourist lodging house, regularly catering to tourist, and/or traveler, containing several independent table rooms, providing common facilities, such as toilets, bathrooms/showers, living and dining rooms and/or kitchen and where a combination of board and lodging may be provided. g.4. The term lodging establishment shall also include lodging houses, which shall mean such establishments are regularly engaged in the hotel business, but which, nevertheless, are not registered, classified and licensed as hotels by reason of inadequate essential facilities and services. Long term arrangement for residential purposes is not covered. g.5. For restaurants, the discount shall be for the sale of food, drinks, dessert and other consumable items served by the establishments, including value meals and promotional meals offered for the consumption of the general public. g.6. For this purpose, the term "restaurant" shall refer to any establishment offering to the public, regular and special meals or menu, fast food, cooked food and short orders. Such eating places may also serve coffee, beverages and drinks. Food and goods sold by establishments that are not restaurants are not covered, therefore not allowed to give the 20% discount. g.7. For recreation centers, the discount shall be for the utilization of services in the form of fees, charges and rental facilities, such as, but not limited to, sports facilities and equipment. h. On admission fees charged by theaters, cinema houses and concert halls, circuses, carnivals, and other similar places of culture, leisure and amusement, where the discount shall be on the admission fees charged by the said establishments; i. On funeral and burial services for the death of Senior Citizens. The beneficiary or any person who shall shoulder the funeral and burial expenses of the deceased Senior Citizen shall claim the discount, such as casket, embalmment, cremation cost and other related services for the Senior Citizen upon payment and presentation of his death certificate; DcITHE xxx xxx xxx "SEC. 10. Exemption from VAT of the sale to Senior Citizens. Sales of any goods and services under Section 4 of these Regulations to Senior Citizens shall be exempt from the value-added tax. To ensure the full entitlement of the Senior Citizen to the discount prescribed in the Act, the sellers are precluded from billing VAT to the Senior Citizens." Not belonging to the exclusive list of discounted and VAT-exempt sale of goods and services in RA No. 9994 and RR No. 07-2010, the payments by Senior Citizens of association dues, assessments and other charges to the condominium corporations and homeowners' associations which DMCI Property Management Corporation manages and supervises are not entitled to the 20% discount and are subject to VAT. Please be guided accordingly. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue