Group opposes lifting of VAT exemption in low-cost housing

THE Subdivision and Housing Developers Association (SHDA) is against the lifting of the value added tax (VAT) exemption to the low-cost housing as it will bring upon burden to the buyers.

Currently, exemption applies for properties worth P3.1 million but because of the recent tax reform bill, SHDA board member Sol Lagmay said the Department of Finance (DOF) proposes that all residential units and housing be imposed with tax.

According to Finance undersecretary Tonette Tiongco the VAT exemptions included in the Tax Reform for Acceleration and Inclusion (Train) is only limited to raw food and other necessities like health and education. Because of this, the exemption on low-cost housing, residential lots, and lease of residential units amounting to P12,800 is proposed to be removed.

Lagmay said if tax implementation on the said sector is really needed, they would still request for VAT exemption even for housing developments worth at least P1.7 million instead of implementing VAT for all residential units and houses which would cover even the low-cost housing.

SHDA board member Cecille Ilagan, for her part, said this proposal is against the poor as this would greatly affect those that can only afford low-cost housing.

u201cIf VAT shall be imposed, there will be an additional 12 percent of the package price to be paid by the buyer. Actually the buyers will be directly affected because it will be collected from them. The negative impact shall be on the buyers not on the developers,” Lagmay said.

It was reported that senators Sonny Angara and JV Ejercito opposed on the lifting of VAT exemption for low-cost housing as it would worsen the socialized housing backlog of the country and would eventually increase the number of Filipinos that do not have houses of their own.

In a separate statement of Finance undersecretary Karl Kendrick Chua, he said tax increase for low-cost and socialized real estate developments will only be around 4 percent, instead of the applied 12 percent VAT, as VAT inputs can be credited instead of “padding the final price to offset the cost of input VAT.”


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