National Housing Authority

August 7, 2009 BIR RULING [SH-(074) 502-09] Section 20 of RA No. 7279; S-20-072-2007 National Housing Authority Quezon Memorial Elliptical Road Quezon City 1100 Attention: Felicisimo F. Lazarte, Jr. Department Manager Northern and Central Luzon Gentlemen : This refers to your letter dated June 22, 2009 stating that a contract was executed between your Office and RFN CONSTRUCTION AND DEVELOPMENT CORPORATION ("RFN" for brevity) for the Livelihood, Productivity and Training Center in Northville 7 Resettlement Project, Barangay Malis, Guiguinto, Bulacan; that the Northville 7 Resettlement Site is a socialized housing project intended for the families affected by the Northrail Relocation Program in Bulacan qualified under the Socialized Housing Program of the government; that the Livelihood, Productivity and Training Center is a multi-purpose center for relocates, intended to enhance the productivity and increase their income; that in support of your request, you submitted to this Office the Notice of Award to RFN and the said Contract between the NHA and RFN and you now apply on the latter's behalf for VAT exemption. 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 "(1) Project-related income taxes; (2) . . . (3) Value-added tax for the project contractor concerned;" In view thereof, RFN Construction and Development Corporation, as a project contractor whose services are engaged by the NHA for the construction of Livelihood, Productivity and Training Center in Northville 7 Resettlement Project, Barangay Malis, Guiguinto, 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 disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service