RR No. 16-2011: Increases the amount of threshold amounts for 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 covered by Section 109 (P), (Q) and (V) of the Tax Code of 1997, as amended, thereby amending certain provisions of RR No. 16-2005, as amended, otherwise known as the “Consolidated VAT Regulations of 2005”

Key points

1. Adjusted thresholds. Under Section 109 (P), P1,500,000 becomes P1,919,500.00 and P2,500,000 becomes P3,199,200.00. Under Section 109 (Q), P10,000 becomes P12,800.00. Under Section 109 (V), P1,500,000 becomes P1,919,500.00. The amounts are rounded off to the nearest hundred.
2. Sale of residential property. A residential lot with a gross selling price above P1,919,500.00, or a house and lot or other residential dwelling above P3,199,200.00, is subject to 10% output VAT for instruments executed on or after November 1, 2005, and 12% starting February 1, 2006. Sales at or below those amounts, with the instrument executed on or after July 1, 2005, are exempt from VAT. Adjacent lots sold to one buyer are exempt only if their aggregate value does not exceed P1,919,500.00.
3. Lease of residential units. Leases with monthly rent per unit not exceeding P12,800.00 are exempt from VAT regardless of aggregate rentals. Where monthly rent per unit exceeds P12,800.00 but the lessor’s yearly aggregate does not exceed P1,919,500.00, the lease is VAT-exempt but subject to 3% Percentage Tax. For mixed units, the units above P12,800.00 are subject to VAT only if their own aggregate annual receipts exceed P1,919,500.00, otherwise to the 3% tax under Section 116.
4. Other sales and services. Sale or lease of goods or properties or services of non-VAT-registered persons with gross annual sales and/or receipts not exceeding P1,919,500.00 is subject to Percentage Tax, and other transactions at or below that amount are exempt from VAT.
5. Adjustment and aggregation. Thresholds are adjusted every 3 years using the Consumer Price Index from the NSO, published through revenue regulations issued not later than March 31 of each year. Husband and wife are separate taxpayers, and VAT-exempt sales are not counted, but income from other VAT-subject lines of business is combined for the threshold.

Who is affected

• Sellers of residential lots, houses and lots, and other residential dwellings
• Lessors of residential units
• Non-VAT-registered persons selling goods or services

Deadlines and effectivity

• Takes effect starting January 1, 2012
• Threshold adjusted every 3 years, regulations issued not later than March 31 of each year