MANILA, Philippines — The Chamber of Real Estate and Builders’ Associations Inc. (CREBA) is urging Congress to keep the status quo on value-added tax (VAT) on housing purchases to enable more Filipinos to buy and have their own homes.
Leaders of the country’s largest group of real estate and housing developers said in a statement, lawmakers should preserve the status quo on VAT-able housing packages to give Filipinos access to decent and affordable housing.
The statement comes as the VAT exemption threshold for house and lots and other residential dwellings is set to be reduced to P2 million by 2021 as provided under the Tax Reform for Acceleration and Inclusion (TRAIN) law.
Signed into law in December 2017, the TRAIN law is the first package of the government’s comprehensive tax reform program.
At present, house and lots and other residential dwellings valued at P2.5 million are VAT-exempt.
CREBA said the imposition of new taxes on the housing sector would hamper efforts to address the country’s housing backlog estimated at 6.57 million.
In addition, the group said the country’s new housing requirement is piling up at 300,000 per year.
CREBA national chairman Charlie Gorayeb said the imposition of VAT would mean an increase in housing prices, making it harder for more people to have their own home.
“VAT is a buyer’s tax which real estate developers have no choice but to fully pass on to homebuyers. And because a once-in-a-lifetime housing purchase at the range of P3.2 million and below is usually availed of under long-term loan, the VAT burden is not a one-time impact,” he said.
For a housing unit sold at P3 million, he said the 12 percent VAT of P360,000 per unit would translate to P1 million over a 30-year mortgage life.
CREBA national president Noel Toti Cariño said imposing VAT would negate its benefits and stifle the growth of the housing sector.