Condo dweller takes VAT issue to SC

A RESIDENT of a Makati City condominium on Monday asked the Supreme Court to void a Bureau of Internal Revenue (BIR) Memorandum Circular imposing the 12-percent value-added tax (VAT) on association dues charged by the condominium building administrators.

Fritz Bryn Anthony Delos Santos, who lives at his father’s condominium at Classica Tower in Makati City, urged the high court to stop the BIR’s collection of VAT on the association dues that condominium tenants and unit owners pay.

In a 17-page petition for certiorari, Delos Santos said Revenue Memorandum Circular (RMC) No. 65-2012 issued by BIR Commissioner Kim Henares had overstepped the spirit of the National Internal Revenue Code (NIRC).

“The undersigned petitioner most respectfully prays that the honorable court will grant his petition by declaring RMC No. 65-2012 void and an invalid subordinate legislation for unduly expanding, modifying, altering and amending Sections 105 and 108 of the NIRC pertaining to the provisions on the value-added tax,” Delos Santos said.

The petitioner said association dues must not be lumped together with the taxable gross income of condominium corporations.

According to the BIR circular, “amounts paid in dues or fees by members and tenants of a condominium corporation form part of the gross income of the latter subject to income tax.”

It says that association dues collected by condominium corporations, along with membership and other fees, “constitute income payments or compensation for beneficial services it provides to its members.”

But Delos Santos argued that such should not apply to condominium association dues, as they are meant to defray a residential building’s maintenance costs.

“…[I]n paying condominium association dues, the unit owners do not buy, transfer or lease any goods, property or services from the condominium corporation as contemplated in the definition of VAT found in Section 105 of the NIRC, which pertinent section was purposely deleted by the CIR in RMC No. 65-2012,” said the petition. Tarra Quismundo