VAT exemption threshold on sale of house and lot, and other residential dwellings updated to P3,199,200; Importation of certain goods to fight COVID-19 exempt from ATRIG; Updated rules on refund of overpaid percentage tax

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VAT exemption threshold on sale of house and lot, and other residential dwellings updated to P3,199,200; Importation of certain goods to fight COVID-19 exempt from ATRIG; Updated rules on refund of overpaid percentage tax

(Revenue Regulations No. 08-2021 issued on June 11, 2021)

This Tax Alert is issued to inform all concerned on the amendments to the Revenue Regulations No. 04-2021 which  provides for the implementing rules and regulations of the value added tax (VAT) and percentage tax provisions of Republic Act No. 11534, also known as Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.

Threshold of VAT exempt sale of house and lot, and other residential dwellings

Under the TRAIN Law, beginning January 1, 2021, VAT exemption on sale of real properties shall only apply to sale of real properties not primarily held for sale to customers or held for lease in the ordinary course of trade or business, sale of real property utilized for socialized housing, and sale of house and lot and other residential dwellings with selling price of not more than PhP2,000,000 as adjusted to Php 3,199,200 in 2011 using 2010 CPI.

Importation of certain goods to fight COVID-19

The importation of the following goods shall not be subject to the requirement of issuance of Authority to Release Imported Goods (ATRIG) before release by the Bureau of Customs:

  1. capital equipment, its spare parts and raw materials, necessary to produce personal protective equipment component;
  2. all drugs, vaccines and medical devices specifically prescribed and directly used for the treatment of COVID-19; and
  3. drugs, including raw materials, for the treatment of COVID-19 approved by the FDA for use in clinical trials.

The above exemption claimed shall be subject to post audit by the Bureau of Internal Revenue (BIR) or the Bureau of Customs (BOC), as may be applicable.

Refund of overpaid percentage tax

The refund of overpaid percentage tax as a result of the decrease of tax rate from 3% to 1% starting July 1, 2020 until effectivity of RR No. 04-2021 will be allowed for the following instances:

a. Taxpayer shifted from non-VAT to VAT-registered status; or

b. Taxpayer has opted to avail the 8% income tax rate at the beginning of TY 2021.

RR No. 08-2021 shall take effect fifteen (15) days following its publication in the Philippine Star on June 12, 2021.

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