National Housing Authority

February 25, 2009 BIR RULING [SH-(014) 141-09] 20 (d) RA 7279; S-20-092-99 National Housing Authority Quezon Memorial Circle Elliptical Road, Diliman Quezon City Attention: Mr. Felicisimo F. Lazarte, Jr. Department Manager, Northern and Central Luzon Gentlemen : This refers to your letter dated January 8, 2008 stating that the National Housing Authority (NHA) with Tax Identification No. (TIN) 000-916-384, had engaged the services of T.M. Abad Construction (TIN 240-071-827-000) for the construction and completion of 10-Classroom 2-Storey School Building in Northville 4 Resettlement Site, Brgy. Lambakin, Marilao, Bulacan; that the Northville 4 Resettlement Site is a socialized housing project intended for the families affected by the Northrail Relocation Program in Bulacan and qualified under the socialized housing program of the government; that the above-stated Project is expected to benefit school children of 2,843 families relocated in the said resettlement site; and that in support of your request you submitted to this Office the Contract you executed with T.M. Abad Construction and you now apply on behalf of T.M. Abad Construction for VAT-exemption. ITECSH 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: xxx xxx xxx "(3) Value-added tax for the project contractor concerned;" In view thereof, T.M. Abad Construction, as a project contractor whose services are engaged by the NHA for the construction and completion of 10-Classroom 2-Storey School Building in Northville 4 Resettlement Site, Brgy. Lambakin, Marilao, Bulacan is exempt from the payment of VAT on its gross receipts from the said project. 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. AHCcET Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service