National Housing Authority

November 18, 2009 BIR RULING [SH-(113) 723-09] R.A. No. 7279; VAT Ruling No. 003-03 National Housing Authority Quezon Memorial Elliptical Road Diliman, Quezon City Attention: Mr. Felicisimo F. Lazarte Department Manager Northern and Central Luzon Gentlemen : This refers to your letter dated June 23, 2009 requesting on behalf of T.M. Abad Construction for exemption from the payment of value-added tax (VAT) in relation to its construction works for a socialized housing project pursuant to Section 20 of R.A. No. 7279, otherwise known as the "Urban Development and Housing Act of 1992." CIHTac As represented, the National Housing Authority is the implementing arm in the National Shelter Program. On the other hand, T.M. Abad Construction is the contractor of the Rehabilitation of 29 Shallow Wells and Riprapping of Existing Creek in Northville 6 Resettlement Project, Barangay Santol, Balagtas, Bulacan. The aforesaid resettlement is a socialized housing project intended for families affected by the Northrail Relocation Program in Bulacan qualified under the Socialized Housing Program of the government. In reply, please be informed that pursuant to Section 20 of R.A. No. 7279, pertinent portion of which reads as follows: "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) . . . (2) . . . (3) Value-added tax for the project contractor concerned;" As project contractor of the Rehabilitation of 29 Shallow Wells and Riprapping of Existing Creek in Northville 6 Resettlement Project, Barangay Santol, Balagtas, Bulacan, T.M. Abad Construction 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. TIaCHA 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 as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service