Thresholds

THE Bureau of Internal Revenue (BIR) has issued Revenue Regulations No. 16-2011 increasing the amount of threshold amounts for the sale of residential lot, sale of house and lot, lease of residential unit and sale or lease of goods or properties or performance of services amending the Consolidated Value Added Tax (VAT) Regulations of 2005.

Sale of real properties held primarily for sale to customers or held for lease in the ordinary course of trade or business of the seller shall be subject to VAT.

Sale of residential lot with gross selling price exceeding P1,919,500, residential house and lot or other residential dwellings with gross selling price exceeding P3,199,200.00, is subject to the VAT. The previous threshold was P1,500,000 for residential lots and P2,500,000 for residential house and lot or other residential dwellings.

VAT-exempt transactions shall now generally include the sale of lease of goods or properties or the performance of services when the gross annual sales and/or receipts do not exceed the amount of P1,919,500 provided that every three years thereafter, the amount shall be adjusted to its present value using the Consumer Price Index, as published by the National Statistics Office.The threshold was previously P1,500,000.

For purposes of the threshold of P1,919,500, the husband and the wife (for married individuals) shall be considered separate taxpayers. However, the aggregation rule for each taxpayer shall apply. For instance, if a professional, aside from the practice of his profession, also derives revenue from other lines of business which are otherwise subject to VAT, the same shall be combined for purposes of determining whether the threshold has been exceeded. Thus, the VAT-exempt sales shall not be included in determining the threshold.

Also VAT-exempt are lease of residential units with a monthly rental per unit not exceeding P12,800 regardless of the amount of aggregate rentals received by the lessor during the year. The foregoing notwithstanding, lease of residential units where the monthly rental per unit exceeds P12,800 but the aggregate of such rentals of the lessor during the year do not exceed P1,919,500 shall likewise be exempt from the VAT, however, the same shall be subjected to the 3 percent, percentage tax. The previous threshold for the monthly rental was P10,000.

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