VAT Ruling No. 069-99

July 16, 1999 VAT RULING NO. 069-99 108 (A) R.R. 7-95 069-99 Ms . Mary Bernadette U . Navarro Office of the Government Corporate Counsel 6/F Philsucom Building North Avenue, Diliman Quezon City M a d a m : This refers to your letter dated November 15, 1998 requesting for a ruling as to whether or not the sale to you by White House Development Corporation (WHDC) of its 88 square-meter-lot is subject to value added tax. It is your contention that this transaction is exempt from the imposition of the ten percent (10%) value added tax because the contract price of said lot only amounted to P231,000 which is obviously below the required minimum P500,000 (now P550,000) provided under the EVAT law (RA No. 7716). Moreover, you also claim that for your installments on which VAT is collected, WHDC has been issuing non-VAT invoices. In reply, please be informed that the P550,000 threshold limit finds its basis in Section 109(z) of the 1997 Tax Code which provides for the exemption from VAT of the "(z) Sale or lease of goods or properties or the performance of services . . ., the gross annual sales and/or receipts do not exceed the amount of Five Hundred Fifty Thousand Pesos (P550,000): . . ." However, the threshold limit contained in this provision speaks of the annual gross receipts of the real estate dealer which in this case is the annual gross receipts of WHDC, irrespective of the contract price amounts of the lots held for sale. In view thereof, this Office of the opinion that the sale to you by WHDC of the 88 square-meter-lot with contract price of P231,000 is subject to the imposition of the ten percent (10%) VAT provided under Section 108(A) of the 1997 Tax Code as implemented by Sec. 4-102-1 of Revenue Regulations No. 7-95, as amended, provided that the gross receipts of WHDC exceed the P550,000 threshold. In such a case, WHDC which is collecting VAT on your payments is required to issue VAT invoices corresponding to such payments. This is specifically provided for under Section 4.108-1 of Revenue Regulations No. 7-95, as amended. WHDC's deliberate failure to issue VAT invoices on its transactions subject to VAT shall render it liable to the administrative and penal provisions under Section 4.111-1 of same Regulations in addition to the other administrative and penal sanctions; provided for in the 1997 Tax Code and its implementing regulations. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Local & Enforcement Group)