BIR Ruling No. 452-14

November 4, 2014 BIR RULING NO. 452-14 Sec. 20, RA 7279; BIR Ruling No. 063-14 Patrila Builders, Inc. Rm. 201 AJL Bldg. Gen. Luna St., Iloilo City Attention: Lyndon P. Lataquin President/CEO Gentlemen : This refers to the letter of Lorna M. Seraspe, Group Manager of Visayas Management Office, National Housing Authority dated June 29, 2013, requesting tax exemption on the land development of Ajuy Ville Subdivision Project, Phase I located at Brgy. Poblacion, Ajuy, Iloilo pursuant to Republic Act (R.A.) No. 7279, otherwise known as the "Urban Development and Housing Act of 1992". Documents submitted disclosed that on February 22, 2013, the National Housing Authority (NHA) in its Memorandum to the NHA Board of Directors recommended that the contract for the land development of Ajuy Ville Subdivision Project, Phase I located at Brgy. Poblacion, Ajuy, Iloilo be awarded to Patrila Builders, Inc. (TIN: 004-865-108-000). Patrila Builders, Inc. is a domestic corporation duly registered with the Securities and Exchange Commission (SEC) under Registration No. ES096000050, to undertake land development of one hundred twenty nine (129) socialized lots units in Ajuy Ville Subdivision Project, Phase I located at Brgy. Poblacion, Ajuy, Iloilo including the survey works, riprap works, general earthworks, general roadworks, drainage works, water works and miscellaneous works with the contract price of Ten Million Four Hundred Ninety Nine Thousand Four Hundred Thirty Nine and 57/100 pesos (P10,499,439.57); and that on June 6, 2013, Contract for Ajuy Ville Subdivision Project, Phase I, Brgy. Poblacion, Ajuy, Iloilo was executed by the NHA and Patrila Builders, Inc. to undertake land development for one hundred twenty nine (129) socialized lots units in Ajuy Ville Subdivision Project, Phase I located at Brgy. Poblacion, Ajuy, Iloilo including the survey works, riprap works, general earthworks, general roadworks, drainage works, water works and miscellaneous works. HcaATE 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 Patrila Builders, Inc. is a project contractor whose services are engaged by NHA to undertake land development and its necessary construction components for one hundred twenty nine (129) socialized lots in Ajuy Ville Subdivision Project, Phase I located at Brgy. Poblacion, Ajuy, Iloilo and which was certified by the NHA as a socialized housing project as resettlement site pursuant to RA 7279, the income directly realized by Patrila Builders, Inc. from the development of the Ajuy Ville Subdivision Project, Phase I located at Brgy. Poblacion, Ajuy, Iloilo shall be shall be exempt from project-related income taxes in so far as one hundred twenty nine (129) socialized lots (including survey works, riprap works, general earthworks, general roadworks, drainage works, water works and miscellaneous works) are concerned. (BIR Ruling No. 063-14 dated February 19, 2014) AEcTCD Moreover, Patrila Builders, Inc. is likewise exempt from the payment of VAT on its gross receipts from the land development and its necessary construction components for one hundred twenty nine (129) socialized lots. 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. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner Bureau of Internal Revenue