VAT Ruling No. 003-03

January 9, 2003 VAT RULING NO. 003-03 20 (d) R.A. 7279 S-20-092-99 Mac Builders 23 Aviles St., Ormoc City Attention: Mr. Manuel A. Chua Proprietor/General Manager Gentlemen : This refers to your letter dated September 23, 2002 requesting for exemption from the payment of value-added tax (VAT) relative to your 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". It appears that MAC Builders is the contractor for the Tacloban Resettlement Project, Phase I located at Barangay Palanog, Tacloban City; that the aforesaid resettlement is a socialized housing project for the underprivileged and homeless; and that in support of your request, you submitted to this Office the Contract you executed with the National Housing Authority dated July 31, 2001, and other pertinent documents. 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) . . . "(2) . .. "(3) Value-added tax for the project contractor concerned;" as project contractor of the Tacloban Resettlement Project, Phase I located at Barangay Palanog, Tacloban City, MAC Builders 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. ECaScD 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.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group