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Developers urge BIR to suspend VAT on low-cost housing projects
In a statement, the Chamber of Real Estate and Builders’ Associations Inc. (CREBA) called on the BIR to immediately issue a ruling suspending the imposition of VAT on low-cost housing units as many Filipinos who have yet to purchase their own homes are struggling due to the crisis.
Krizjohn Rosales, file

Developers urge BIR to suspend VAT on low-cost housing projects

Louella Desiderio (The Philippine Star) - October 11, 2020 - 12:00am

MANILA, Philippines — Real estate and housing developers are urging the Bureau of Internal Revenue (BIR) to suspend the imposition of value-added tax on low-cost housing which is set to take effect next year.

In a statement, the Chamber of Real Estate and Builders’ Associations Inc. (CREBA) called on the BIR to immediately issue a ruling suspending the imposition of VAT on low-cost housing units as many Filipinos who have yet to purchase their own homes are struggling due to the crisis.

CREBA issued the statement as the three-year reprieve under the Tax Reform for Acceleration and Inclusion (TRAIN) law for low-cost housing is set to end by December.

Under the TRAIN law, buyers of residential lots worth up to P1.9 million and house and lot units up to P3.2 million are exempt from payment of VAT.

By January next year, only those worth P2 million and below would be VAT-exempt.

CREBA wants to keep the current VAT exemption as many have lost their jobs due to the COVID-19 crisis.

According to the group, the housing backlog is at 6.57 million units, and the gap between supply and demand is increasing by 300,000 units per year.

CREBA national chairman Charlie Gorayeb said the imposition of VAT on low-cost housing would raise prices and make it harder for Filipinos to have a home they can call their own.

“Real estate developers have no choice but to fully pass on VAT to homebuyers. When obtained through a long-term loan, the 12 percent VAT of about P360,000 for a P3.2 million home actually translates to P1 million over a 30-year mortgage life,” he said.

With the pandemic making it more necessary to have homes in decent and safe communities, he said homebuyers would need fixed, low-interest, long-term housing loans from the government.

CREBA national president Noel Cariño said the additional taxes to be collected by the government from housing would not make up for the potential massive slowdown of the sector.

He said many Filipino workers who were forced to defer plans to buy homes due to the COVID-19 crisis would suffer the brunt of the VAT imposed on housing purchases.

“But with housing being globally-recognized for its economic multiplier effects, a robust housing industry will be a primary catalyst for economic recovery to help the entire country heal as one,” he said.

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