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  • BIR raises VAT exemption cap for housing to P3.6M
    L. Alzona de los Reyes
    in All About Philippine Real Estate
    Posted Mar 12, 2024

    BIR raises VAT exemption cap for housing to P3.6M

    BIR Commissioner Romeo Lumagui Jr. (Photo from the Facebook page of the BIR)

    MANILA, Philippines — The Bureau of Internal Revenue (BIR) announced on Wednesday a higher price threshold for house and lot purchases exempted from the value-added tax (VAT).

    According to Revenue Regulations No. 1-2024, the standard VAT rate of 12 percent will not be collected for purchases of house and lot packages and “other residential dwellings” not more than P3.6 million, higher than the previous ceiling of P3.2 million.

    The tweak followed Section 109(P) of the National Revenue Code, which ordered the BIR to adjust the threshold every three years using the figures in the Consumer Price Index, a measure of inflation.

    READ: BIR imposes 1 percent withholding tax on online merchants

    Starting in 2022, the Philippine Statistics Authority changed the base year it uses to compute inflation to 2018 from 2012. The rebasing is periodically done to reflect the changing consumption patterns of Filipinos. “This timely increase in VAT exemption shows our commitment to excellent taxpayer service,” BIR Commissioner Romeo Lumagui Jr. said in a statement.

    READ: CHR lauds gov’t housing program for informal settlers in NCR

    The Duterte-era Tax Reform for Acceleration and Inclusion or Train law lowered the VAT exemption of houses, lots, and other residential dwellings to P2 million from the previous P2.5 million so that more housing could be taxed. At the time, subdivision and housing developers said the move might discourage home buyers.

    In 2021, the price of VAT-free housing was raised to P3.2 million.

    There was an attempt to insert a provision raising the threshold to P4.2 million in the Corporate Recovery and Tax Incentives for Enterprises or CREATE bill, but former President Rodrigo Duterte vetoed that item when he signed the law in March 2021. He claimed that had the provision been approved, the government would have lost an estimated P155.3 billion in revenues until 2023.

    Inquirer Business’ Biz Buzz reported in November that the Subdivision and Housing Developers Association and National Real Estate Association had asked the Marcos administration to raise the VAT exemption cap to reflect current economic conditions and make housing units more affordable.



    Read more:https://newsinfo.inquirer.net/1890758/bir-raises-vat-exemption-cap-for-housing-to-p3-6m#ixzz8UGA3skeB

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