National Housing Authority

October 19, 2009 BIR RULING [SH-(097) 652-09] 20 RA 7279; SH(034) 191-2008 National Housing Authority Office of the President Quezon Memorial Circle, Elliptical Road Diliman, Quezon City Attention: Mr. Froilan R. Kampitan Assistant General Manager Officer in Charge, NCR Gentlemen : This refers to your letter dated August 19, 2009 requesting for exemption from the payment of project-related taxes particularly the value-added tax pursuant to Republic Act (R.A.) No. 7279, otherwise known as the "Urban Development and Housing Act of 1992". It is represented that the Contract for the Boundary, Relocation, Topographic, Structural and Individual Titling of Tala Development Project Phase III (Lot I & Lot 3-C), Tala, Caloocan City is being undertaken by Vircon Survey Services; and that it is a survey component of the Socialized Housing Program of the Government. In reply, please be informed that Section 19, Article V of RA 7279, which amends the Charter of NHA, reads as follows: "Sec. 19. Incentives for the National Housing Authority. The National Housing Authority, being the primary government agency in charge of providing housing for the underprivileged and homeless, shall be exempted from the payment of all fees and charges of any kind, whether local or national, such as income and realty taxes. All documents or contracts executed by and in favor of the National Housing Authority shall also be exempt from the payment of documentary stamp tax and registration fees, including fees required for the issuance of transfer certificates of title." It is to be noted that under RMC 42-2001 dated October 5, 2001, the exemption from documentary stamp tax of NHA in connection with any of its socialized housing project extends to the other party (either seller or buyer) that deals or transacts with the NHA. ScHAIT Further, Section 20 of RA No. 7279 provides as follows: "Sec. 20. Incentives for the 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) Capital gains tax on raw lands used for the project; "(3) Value-added tax for the project contractor concerned;" Accordingly, the contractor of the socialized housing units under R.A. No. 7279 is exempt from the payment of value-added tax pursuant to the aforecited provision. However, purchases of goods/articles by the project contractor shall be subject to value-added tax, even if the said purchases are to be used for the socialized housing project. 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 null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service