Expanded Value-Added Tax

Transactions on goods, properties and services newly covered under R.A. 7716 (the Expanded VAT Law) effective January, 1996 includes real properties held primarily for sale to customers or held for lease in the ordinary course of business.

Section 109 (w) of the NIRC states that exempt transactions from value added tax includes sale of real properties primarily held for sale to customers or held for lease in the ordinary course of trade or business for real property utilized for low-cost and socialized housing as defined by R.A. 7279, otherwise as the Urban Development and Housing Act of 1992, and other related laws, house and lot and other residential dwellings valued at P1,000,000 and below; provided, that not later than January 31^st of the calendar year subsequent the effectivity of Tax Reform Act of 1997 and each calendar year thereafter, the amount of P1,000,000 shall be adjusted to its present value using the Consumer Price Index, as published by the NSO:

(x)Lease of a residential unit with a monthly rental not exceeding P8,000; provided, that not later than January 31^st of the calendar year subsequent effectivity of RA 8241 and each calendar year thereafter, the amount of P80,000 shall be adjusted to its present value using the Consumer Price Index, as published by the NSO. (R.A. 8241, an act amending R.A. 7716, approved on December 20, 1996).