Petition to Implement VAT-Exemption of the Homeowners Associations

Petition to Implement VAT-Exemption of the Homeowners Associations

Started
March 11, 2014
Petition to
Bureau of Internal Revenue Kim S. Jacinto-Henares
Petition Closed
This petition had 65 supporters

Why this petition matters

Started by John Petalcorin

This is a petition that all homeowners in condominiums and subdivisions must sign.

BACKGROUND. In 2012, the Bureau of Internal Revenue (BIR) published Revenue Memorandum Circular (RMC) No. 65-2012 that imposed Value Added Tax (VAT) on dues that are being paid by members of Condominium and Subdivision Homeowners Associations (HAs). This petition requests BIR to cancel RMC No. 65-2012.

LEGAL BASIS OF TAX EXEMPTION. Section 18 of the Magna Carta for Homeowners and Homeowners’ Associations (Republic Act 9904) of January 7, 2010, says: "Where the LGUs lack resources to provide for basic services, the associations shall endeavor to tap the means to provide for the same. In recognition of the associations’ efforts to assist the LGUs in providing such basic services, association dues and income derived from rentals of their facilities shall be tax - exempt: Provided, That such income and dues shall be used for the cleanliness, safety, security and other basic services needed by the members, including the maintenance of the facilities of their respective subdivisions or villages." 

PRINCIPLE. Homeowners Associations rely its income and operations fund solely from contributions of its members. Hence, HAs are self-help organizations that provide basic public utilities and services such as lighting utilities, sanitary services, and security services in common areas of condominium and subdivision communities. These utilities and services are benefited by the general public for free. The services of the Local Government Units (LGUs) does not reach the common areas of the HAs. We are applying to the HAs the same principle of tax-exemption that is being enjoyed by the beneficiaries of the Cooperative Code of the Philippines (R.A. No. 9520) and Revised Non-Stock Savings and Loan Association Act of 1997 (R.A. No. 8367).

SUGGESTED IMPLEMENTATION. To prevent abuse and tax evasion, we recommend that the tax exemption be granted only to HAs with unexpired Certificate of Registration as Homeowners Association in the Housing and land Use Regulatory Board (HLURB). To implement this, we recommend that BIR develops a Certificate of Tax Exemption for HAs that is somewhat similar to BIR Form No. 2333-B Certificate of Tax Exemption for Cooperatives.

Petition Closed

This petition had 65 supporters

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Decision Makers

  • Kim S. Jacinto-HenaresBureau of Internal Revenue