National Housing Authority

March 13, 2009 BIR RULING [SH-(023) 209-09] 20 (d) RA 7279; S-20-092-99 National Housing Authority Regional Office X Julio Pacana St., Cagayan de Oro City Attention: Mr. Neofito A. Hernandez Area Manager, MMO Gentlemen : This refers to your letter dated April 4, 2008 stating that the National Housing Authority (NHA) with Tax Identification No. (TIN) 000-916-384, engaged the services of ESR Construction and Supplies whose TIN is 103-306-956-000, for the construction of 109 Duplex-Type Core Housing Units in Laguindingan Residential Project Phase 2, Laguindingan, Misamis Oriental; that the subject development is a socialized housing project intended for the underprivileged and homeless families who are affected by the proposed Laguindingan International Airport; and that in support of your request you submitted to this Office the Notice of Award to ESR Construction and Supplies and you now apply on their behalf for VAT-exemption. IESTcD 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, ESR Construction and Supplies, as a project contractor whose services are engaged by the NHA for the construction of 109 Duplex-Type Core Housing Units in Laguindingan Residential Project Phase 2 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service