GPPs not required to present tax exemption ruling

General professional partnerships (GPPs) are not included among the persons or entities that are required to present a tax exemption certificate or ruling pursuant to Revenue Memorandum Circular No. (RMC) 8-2014 in order to be exempt from creditable withholding tax on income payments they receive.

Under RMC 8-2014, all entities or persons claiming exemption are required to provide a copy of their valid, current and subsisting exemption certificate or ruling. Failure on the part of the taxpayer to present the tax exemption certificate or ruling shall subject him to the payment of appropriate withholding taxes due on the transaction. 

The BIR clarified that under RMC 03-2012, income payments made to GPPs in consideration of their professional services are not subject to income tax and, consequently, to withholding tax prescribed in RR 2-98, as amended. Hence, the requirement to present a tax exemption certificate or ruling does not apply to GPPs.

Revenue Memorandum Circular No. 60-2014, July 24, 2014

Tax Brief

Punongbayan and Araullo

VAT exempt sale of real property

While the sale of low-cost housing units that exceed the price ceiling of P750,000 per unit is not eligible for VAT exemption for low-cost housing under Section 109(P) of the Tax Code, the sale may still be exempt from VAT if the selling price of the property held primarily for sale to customers does not exceed the thresholds of P1,919,500 on sale of residential lots, and P3,199,200 for sale of house and lot and other residential dwellings pursuant to the same provisions of Section 109(P) of the Tax Code.

Under Section 109(P) of the Tax Code, as implemented by Section 4.109-1 of RR 16-05, sale of real property utilized for low-cost housing wherein the unit selling price is within the selling price per unit of P750,000 is exempt from VAT. Moreover, Section 109 further provides that the sale of properties held primarily for sale to customers with a selling price not exceeding the thresholds of P1,919,500 on sale of residential lots, and P3,199,200 for sale of house and lot and other residential dwellings are exempt from VAT.

The BIR held that while the selling price of P1,250,000 of the low-cost housing units sold by a real estate company does not qualify under the classification of a low-cost housing, the selling price still meets the VAT-exempt threshold of P3,190,200 for sale of house and lot and other residential dwellings under Section 109(P) of the Tax Code. 

Hence, the sale of the housing units with selling price of P1,250,000 is exempt from VAT.

BIR Ruling No. 285-2014, July 9, 2014

Tax Brief

Punongbayan and Araullo