Question & AnswerQ&A (BIR REVENUE REGULATIONS NO. 3-2012)
The main purpose of BIR Revenue Regulations No. 3-2012 is to adjust the threshold amounts for the sale of residential lots, sale of house and lot, lease of residential unit, and sale or lease of goods or properties or performance of services covered by Sections 109(P), (Q), and (V) of the Tax Code of 1997, using the Consumer Price Index.
The adjusted threshold amounts took effect starting January 1, 2012.
The threshold for the sale of a residential lot was adjusted from P1,500,000 to P1,919,500. The threshold for the sale of a house and lot was adjusted from P2,500,000 to P3,199,200.
Sales of residential lots with gross selling prices exceeding the adjusted threshold amounts (P1,919,500 for residential lots and P3,199,200 for house and lot) executed and notarized on or after January 1, 2012, are subject to twelve percent (12%) output VAT.
No, sales of residential lots valued at or below the threshold amounts (P1,919,500 for residential lots and P3,199,200 for house and lot) executed and notarized on or after January 1, 2012, are exempt from VAT.
For instruments of sale executed and notarized between November 1, 2005, and December 31, 2011, the threshold amounts were P1,500,000 for residential lots and P2,500,000 for house and lot, with applicable VAT of 10% starting from Nov. 1, 2005, and 12% beginning February 1, 2006, on the excess.
The threshold amounts must be adjusted every three (3) years to present value using the Consumer Price Index published by the National Statistics Office (NSO), and such adjustment shall be published through revenue regulations not later than March 31 of each year.
Sections 109(P), (Q), and (V) of the Tax Code of 1997, as amended, are covered by these threshold adjustments.
Section 3's repealing clause modifies, amends, or revokes all existing rules, regulations, or other issuances inconsistent with the provisions of these regulations.
The regulation was signed by Cesar V. Purisima, Secretary of Finance, and Kim S. Jacinto-Henares, Commissioner of Internal Revenue.