Tax bureau clarifies incentives for socialized housing

PRIVATE CONTRACTORS can avail of the tax incentives for socialized housing only to cover the construction and development of houses and lots, the Bureau of Internal Revenue (BIR) has said.

 

Revenue Memorandum Circular No. 32-2012, dated July 16, clarified tax exemptions granted to the private sector under Republic Act (RA) 7279, or the Urban Development and Housing Act of 1992.

“From the foregoing, the tax incentive provision... is limited to the construction and development of houses and lots or home-lots, only with a view to reduce the cost of housing units for the benefit of the underprivileged and homeless...” the issuance read.


Hence, the construction and development of classrooms, school buildings, multi-purpose halls, covered courts and livelihood centers do not fall within the term of “socialized housing,” it explained, and cannot qualify for tax exemptions.


RA 7279 offered a host of tax incentives for the private sector to encourage their participation in socialized housing.


Qualified firms are exempted from income tax and value-added tax for housing projects.


They are also excluded from coverage of capital gains tax on raw land use, transfer tax for both raw lands and completed projects, as well as donor’s tax for lands donated for socialized housing.


They can likewise avail of non-tax incentives, such as simplified accreditation requirements and one-stop offices for the processing, approval and issuance of clearances, permits and licenses. These documents must be released within 90 days from the submission of all requirements by private developers.


The Aquino administration is working to streamline the grant of tax incentives, in a bid to shore up government revenues.


A fiscal incentives bill was passed by the House of Representatives, and the Senate is expected to deliberate on a similar measure after the last regular session of the 15th Congress started yesterday.


The government aims to collect P1.561 trillion in revenues this year to help fund expenditures programmed at P1.84 trillion.


The BIR, responsible for 70% of government revenues, is tasked to collect P1.066 trillion. As of the first semester, it had already raked in some P522.15 billion.  

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit www.ra9646.com.