BIR Ruling [UN-414-95]

November 23, 1995 BIR RULING [UN-414-95] RSP Lim Construction and Allied Services Blk. 7, Lot 10 Ph. 281 Karangalan Vil., Pasig City Attention: Engr . Rogelio SP . Lim General Manager Gentlemen : This refers to your letter dated July 19, 1995 requesting for exemption from the payment of value-added tax and project-related income taxes for the project contractor concerned, engaged in the construction of low-cost housing considered as part of the government's socialized housing projects. cdtech Documents submitted show that a joint venture agreement was entered into between Filinvest Land, Incorporated and RSP Lim Construction and Allied Services for the construction of the following low-cost housing projects, viz: (1) Pabahay 2000 project located at General Trias, Cavite consisting of 171 housing units with an area of 21.60 square meters per unit at P55,329.00; (2) LOFT Melody Plains located at San Jose del Monte, Bulacan consisting of original 52 housing units and additional of 171 housing units with an area of 21.96 square meters per unit at P55,329.00; and (3) Mintu Housing Project located at Tanza, Cavite consisting of additional 48 housing units at P55,329.00 per unit. and that said projects are intended to benefit the less privileged and homeless citizens. In reply, please be informed that pursuant to Section 20 of R.A. No. 7279, pertinent portion of which 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: (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; the agreement entered into by RSP Lim Construction and Allied Services and the Filinvest Land, Incorporated to provide low-cost housing for the less privileged citizens is exempt from the payment of project-related income taxes and value-added tax for the project contractor concerned. 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 disclosed that the facts are different, and/or any of the requirements imposed in this letter are not complied with, then this ruling shall be considered null and void. (BIR Ruling No. UN-103-94 dated March 28, 1994) Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)