BIR Ruling No. 439-14

October 29, 2014 BIR RULING NO. 439-14 Sec. 20, RA 7279; BIR Ruling No. 063-14 Eaglerock Construction and Development Corporation 53 Carmel 11 Subdivision Brgy. Bahay Toro, Quezon City Attention: Rainier Z. Gerona President Gentlemen : This refers to the letter dated May 5, 2014 of Arch. Susana V. Nonato, Officer-In-Charge, SLB-AMO III, National Housing Authority (NHA), requesting for the issuance of Certificate of Tax Exemption for the Construction of Core Housing Units (701 Units) of Kinamaligan Resettlement Project Phase 1 located at Brgy. Maingaran, Masbate City pursuant to Republic Act (R.A.) No. 7279, otherwise known as the "Urban Development and Housing Act of 1992". Documents submitted disclosed that on August 12, 2013, the NHA in its Memorandum for the NHA Board of Directors recommended that the contract for the construction of Core Housing Units (701 units) of Kinamaligan Resettlement Project Phase 1 located at Brgy. Maingaran, Masbate City be awarded to EagleRock Construction and Development Corporation; EagleRock Construction and Development Corporation (TIN 243-368-626-000), is a domestic corporation duly registered with the Securities and Exchange Commission (SEC) under Registration No. CS200601647; that Resolution No. 5658 Series of 2013 dated 30 August 2013 was issued that the contract for the Construction of Core Housing Units (701 Units) of Kinamaligan Resettlement Project Phase 1 located at Brgy. Maingaran, Masbate City was awarded to Eagle Rock Construction and Development Corporation with a contract price of Seventy Two Million Three Hundred Ninety Four Thousand One Hundred Thirty and 05/100 Pesos (P72,394,130.05); and that on November 8, 2013, an Agreement was executed between the NHA and EagleRock Construction and Development Corporation to undertake the Construction of Core Housing Units (701 units) of Kinamaligan Resettlement Project Phase 1 located at Brgy. Maingaran, Masbate City including the Mobilization/Demolization and Miscellaneous Works. AHDaET In reply, please be informed that pertinent portion of Section 20 of RA No. 7279 reads: "Sec. 20. Incentives for Private Sector Participating in Socialized Housing. To encourage greater private sector participation in socialized housing and further reduce the cost of housing units for the benefit of the underprivileged and homeless, the following incentives shall be extended to the private sector. xxx xxx xxx (d) Exemption from the payment of the following: (1) Project-related income taxes; (2) . . .; (3) Value-added tax for the project contractor concerned;" xxx xxx xxx" Considering that and EagleRock Construction and Development Corporation is a project contractor whose services are engaged by NHA to undertake construction of core housing units and its necessary components for Seven Hundred One (701) units in Kinamaligan Resettlement Project Phase 1 located at Brgy. Maingaran, Masbate City, which was certified by the NHA as a socialized housing project as resettlement site pursuant to RA 7279, the income directly realized by EagleRock Construction and Development Corporation from the development of the Kinamaligan Resettlement Project Phase 1 located at Brgy. Maingaran, Masbate City shall be exempt from project-related income taxes in so far as the Seven Hundred One (701) units (including Mobilization/Demolization and Miscellaneous Works) are concerned. (BIR Ruling No. 063-14 dated February 19, 2014) Moreover, EagleRock Construction and Development Corporation is likewise exempt from the payment of VAT on its gross receipts from the construction of core housing units and its necessary components for Seven Hundred One (701) units. However, its purchases of goods/articles shall be subject to VAT, even if the said purchases are to be used for the socialized housing project, since VAT is an indirect tax which can be passed on by the seller of the goods/services. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered as null and void. ECTIHa Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue