House Heeds
Call against
BIR Rulings
for Mass Housing
Congressman Rodolfo G. Valencia, Chairman of the
House Committee on Housing and Urban Development, filed House Resolution No.
1823. The proposed measure seeks to investigate, in aid of legislation, the
perceived “onerous” additional requirement for revenue rulings imposed by the
Bureau of Internal Revenue on housing developers that have “led to adverse
outcomes” in the housing sector.
To date, developers of mass housing continue to
suffer the persistent requirement to present a ruling issued by the BIR
national office for every housing project that is granted exemption from the
payment of the Creditable Withholding Tax (CWT).
The ruling is required by the BIR before the
issuance of the Certificate Authorizing Registration (CAR), a foremost
precondition of the Registry of Deeds for the transfer of the Certificate of
Title. Without the revenue ruling, the Certificate of Income Tax Holiday (ITH)
issued by the Board of Investments (BOI) is not honored as sufficient evidence
of tax exemption and, thus, the revenue district officers will only release the
CAR after collecting the CWT.
This means that whilst the national government
continues to recognize mass housing as a priority sector by retaining its
status in the Investment Priorities Plan (IPP), real estate developers are deprived
of their ITH benefits. Taxpayers are thus given no other choice but to pay the
CWT even as two laws, particularly the tax incentives for socialized housing
under Sec. 20 of the Urban Development and Housing Act or UDHA (R.A. 7279) and the
Omnibus Investments Act (E.O. 226), already exempt them from income tax.
Since 2011, the Chamber of Real Estate &
Builders’ Associations, Inc. (CREBA) has joined hands with the other three
major national associations of real estate developers, namely the Subdivision
and Housing Developers’ Association, Inc. (SHDA), the National Real Estate
Association, Inc. (NREA) and the Organization of Socialized Housing Developers
in the Philippines, Inc. (OSHDP) to find a solution on the issue.
The groups waged a concerted appeal to the BIR
Commissioner to immediately cause a memorandum restraining all RDO’s nationwide
from requiring the presentation of BIR rulings for BOI-registered projects and
such other projects that are already deemed exempted from payment of income tax
under existing laws and finally put a stop to a duplicating and irrational
policy that is undermining the broader fiscal benefits of housing and
construction activities.
The requirement of BIR ruling at the stage of
getting a CAR is redundant since the BOI has already ensured that the developer
has complied with all requirements for the grant of ITH before a certification
is issued. Furthermore, the BIR can still conduct a verification of the books
of account of the taxpayer if only to ascertain that the developer should enjoy
ITH privilege under the rules of the IPP. It also grossly weakens the private
sector’s efforts to help address a major social problem: a burgeoning housing
backlog of at least 3.7 million housing units.
To CREBA’s mind, the additional requirement
defeats the very purpose for which the tax incentives were made available to
developers, which is to encourage more players to undertake mass housing
projects, and thus increase economic
activities, mass housing being
the major pump-primer of the economy. The additional taxes generated by
heightened activity in the real estate industry would also be good for the
fiscal coffers.
We
hope that the BIR can consider the industry’s proposal to accept the
certificate of ITH entitlement in the case of BOI-registered projects or the
HLURB certificate of registration and license to sell in the case of socialized
housing projects, as evidence that the transaction is indeed exempt from income
tax and CWT.
This
will encourage more players to participate in the delivery of socialized
housing units for the marginalized, and, in the process, harmonize the
seemingly conflicting, unreasonable and overlapping requirements imposed upon
an already heavily-taxed and highly-regulated industry.
Providing mass housing the impetus it deserves
will lead to more activities in construction and real estate, which will then
redound to the benefit of both the public and private sectors. It is a move
that works to the advantage of all stakeholders and, at the very least, deserves
the attention and consideration of government.
E-mail us at creba_national@yahoo.com or don_cipoy@yahoo.com.ph. #
CREBA SPEAKS
By:
Mr. Charlie A. V. Gorayeb
National
President
CREBA says NO to
requiring BIR Ruling for BOI-registered
Housing Projects
To date,
developers of mass housing projects continue to suffer the persistent
requirement of the BIR to present a ruling issued by its national office for
every housing project that is granted exemption from the payment of the
Creditable Withholding Tax (CWT).
The
ruling is required by the BIR before the issuance of the Certificate
Authorizing Registration (CAR), which is a foremost precondition of the
Registry of Deeds for the transfer of the Certificate of Title. Without the
revenue ruling, the Certificate of Income Tax Holiday (ITH) issued by the Board
of Investments (BOI) is not honoured as sufficient evidence of tax exemption
and, thus, the revenue district officers will only release the CAR after
collecting the CWT.
This
means that whilst the national government continues to recognize mass housing
as a priority sector by retaining its status in the Investment Priorities Plan
(IPP), real estate developers are deprived of their ITH benefits and are given
no other choice but to pay the CWT. This totally contradicts and nullifies the
entitlements grated under certain laws, particularly R.A. 7279 and E.O. 226.
In
October 2011, the four major national associations of real estate developers
and other industry stakeholders bonded together to wage a concerted appeal to
the BIR Commissioner to immediately cause a memorandum restraining all RDO’s
nationwide from requiring the presentation of BIR rulings for BOI-registered
projects and such other projects that are already deemed exempted from payment
of income tax under existing laws and finally put a stop to a duplicating and
irrational policy that is undermining the broader fiscal benefits of housing
and construction activities.
These
associations are the Chamber of Real Estate & Builders’ Associations, Inc.
(CREBA), the Subdivision and Housing Developers’ Association, Inc. (SHDA), the
National Real Estate Association, Inc. (NREA) and the Organization of
Socialized Housing Developers in the Philippines, Inc. (OSHDP).
The
groups mutually aver that the requirement of BIR ruling at the stage of getting
a CAR is redundant since the BOI has already ensured that the developer has
complied with all requirements for the grant of ITH before a certification is
issued. Furthermore, the BIR can still conduct a verification of the books of
account of the taxpayer if only to ascertain that the developer should enjoy
ITH privilege under the rules of the IPP. It also grossly weakens the private
sector’s efforts to help address a major social problem: a burgeoning housing backlog
of at least 3.7 housing units.
To
further support this joint initiative, the Board of Directors of CREBA passed a
resolution in January 6, 2012 elevating the appeal to Vice-President Jejomar C.
Binay, chairman of the Housing and Urban Development Coordinating Council
(HUDCC). The date of the resolution marked one year since CREBA sought the
intervention of the Vice-President in raising the VAT-exemption thresholds for
real estate transactions. Through the endorsement by the Housing Czar, Revenue
Regulation No. 16-2011 was issued and took effect in January 1, 2012.
To
CREBA’s mind, the additional requirement defeats the very purpose for which the
tax incentives were made available to developers, which is to encourage more
players to undertake mass housing projects, and thus increase economic activities, mass housing being the major pump-primer of the economy. The
additional taxes generated by heightened activity in the construction and real
estate industries would also be good for the fiscal coffers.
We
hope that the BIR can consider the industry’s proposal to encourage more
players to participate in the delivery of socialized housing units for the
marginalized, and, in the process, harmonize the seemingly conflicting,
unreasonable and overlapping requirements imposed upon an already heavily-taxed
and highly-regulated industry.
Providing
mass housing the impetus it deserves will lead to more activities in
construction and real estate, which will then redound to the benefit of both
the public and private sectors. It is a move that works to the advantage of all
stakeholders and, at the very least, deserves the attention and consideration
of government.
E-mail us at creba_national@yahoo.com or don_cipoy@yahoo.com.ph. #
* * * * *
CREBA
SPEAKS
By:
Mr. Charlie A. V. Gorayeb
National
President
Higher VAT-exemption
Thresholds open new opportunities for
Real Estate
Starting
January 1 this year, real estate buyers can already enjoy added relief from
value-added taxes (VAT) with the passage of BIR Revenue Regulation No. 16-2011,
which effectively increases the threshold amounts for VAT-exempt transactions,
as follows: (1) From Php1.5 Million to Php1,919,500 for residential lots; and
(2) From Php2.5 Million to Php3,199,200 for house and lot packages or other
residential dwellings.
Adjacent lots, even if covered by
separate titles and tax declarations, can be counted together when sold to a
singular buyer. This means that multiple lots sold or disposed in favour of one
buyer for the purpose of utilizing them as one residential lot will be
VAT-exempt for as long as the aggregate value of the sale does not exceed the
Php1,919,500 limit.
The lease of residential units for a
monthly rent of Php12,800 and below shall likewise be VAT-free. Residential
units leased over Php12,800 monthly is also exempt if the aggregate rental for
the year does not exceed Php1,919,500.
In
January 5, 2011, the Chamber of Real Estate & Builders’ Associations, Inc.
(CREBA) submitted an appeal to the Housing and Urban Development Coordinating
Council (HUDCC) for the adjustment of price ceilings on real estate
transactions that are exempted from the payment of the 12% VAT. The proposal
was subsequently endorsed by the Housing Czar Vice President Jejomar C. Binay
to BIR Commissioner Kim S. Jacinto-Henares.
Pursuant
to Section 4.109-1(B)(p)(4) of BIR Revenue Regulation 16-2005, the present
values could be adjusted every 3 years using inflation or the prevailing
Consumer Price Index (CPI) published by the National Statistics Office (NSO) as
basis.
Between
2004 and 2010, the housing sector has significantly suffered the brunt of
spiralling costs of construction materials, more specifically cement and steel.
Developers have no other choice but to pass this cost on to the buyers, hence,
the upsurge in the price of housing packages. During the same period, NSO and
BSP data indicate that CPI for all items increased by as much as 50%, while
housing and power CPI increased by 36%.
CREBA
is indeed grateful for the passage of this landmark issuance which opens up new
and bigger opportunities for Filipino families to own a home of their own
which, in effect, will push the property industry to develop more units thereby
setting the leash off to the widely-recognized economic multiplier effects of
housing as a powerful catalyst for national growth and development.
The
new incentive augurs well as a win-win solution for both public and private
sectors. It shall in no way reduce government’s revenue-generation efforts.
Instead, it will boost tax collection due to increased development and
construction activities and ensure that
the money spent on housing permeates widely in the economy and create broader
benefits for the people.
By
creating an environment favourable and conducive to real estate business and
investments, developers will be able to build more units to address the
nation’s growing housing requirements, generate additional employment
opportunities and investments given the housing sector’s labour and
capital-intensive nature, and spur economic activities that will transcend at
least 68 allied domestic economic activities whose products and services are inevitably
required for every house built.
* * * * *
“A
big corporation with a big heart” is just
one of the many good things that could describe diversified conglomerate San
Miguel Corporation for initiating the largest corporate social responsibility
project for Sendong victims thus far – 5,000 homes for families left homeless
by flash floods in Eastern Visayas and Northern Mindanao. This, SMC will do in
partnership with Gawad Kalinga and Habitat for Humanity through a donation of
Php500 Million.
CREBA agrees that the ultimate
manifestation of revival for Sendong-stricken cities is to see its people
rebuild their homes and relive their lives in safe communities. For its part,
the Chamber envisions to do its share by piloting a community development in
Cagayan de Oro City with the kind and generous support of its members from all
over the country.
We salute SMC Chairman Eduardo
Cojuangco, Jr. and SMC President Ramon S. Ang, as well as GK and Habitat, for
this noble, long-term and sustainable undertaking. No doubt, the fuel of
genuine concern can only emanate from big hearts.
You may e-mail us
at creba_national@yahoo.com or don_cipoy@yahoo.com.ph. #
