Philippine Real Estate Laws Ownership
REVENUE REGULATION No,13-2012
SUBJECT; VAT treatment on Sale of Adjacent Residential Lots, House and Lot or Other Residential Dwellings, thereby Amending, Certain Provision of Revenue Regulation No. 16-2005 as Amended Otherwise Known as Consolidated VAT Regulation of 2005
TO; All Internal Revenue Officer, Employees and Other Concerned
Section 1,BACKGROUND.it has come to the attention of the bureau of Internal Revenue that Sale to the One Buyer of Adjacent residential lots, house & lots or other residential dwellings like condominium units which are actually being combined and utilized as one residential units are intentionally being documented as separate units in order to avoid payment of value added tax [ VAT] by keeping them below the VAT threshold amount.
Section 2, Sale of Real Properties, -A new paragraph shall be added to Section 4.106-3 of Revenue Regulation No.16-2005, as amended to read as follows;
Section 4.106-3 Sale of properties __Sale of Real properties held primarily for sale to Customer or held for lease in the ordinary course of trade or business of the seller be subject to VAT.
This Includes sale, transfer or disposal within a 12 month period of two or more adjacent residential lots or other residential dwelling in favor of one buyer from the same seller, for the of utilizing the lots, house and lots or other residential dwelling as one residential area wherein the aggregate value of the adjacent properties exceeds P 1,919,500 for residential lots and P 3,199,200 for residential house and lots or other residential dwellings. Adjacent residential lots, house and lots, or other residential dwelling although covered by separate titles and /or separate tax declarations, when sold or disposed to one and the same buyer, whether covered by one or separate Deed/s of conveyance, shall be presumed as a sale of one residential lot, house and lot or residential dwelling.
This however, does not included the sale of parking lot which may or may not be included in the sale of condominium units, the sale of parking lots in condominium is a separate and distinct transaction and is not covered by the rules on threshold amount not being a residential lot, house and lot or a residential dwelling, thus, should be subject to VAT regardless or amount of selling price,
SECTION 3. VAT EXEMPT TRANSACTION. -section 4.109-1 [B]  [P]  of Revenue Regulation No.16-2005, amended is hereby further amended to read as follows;
[p] The following sales of real properties are exempt from VAT. namely
 if two or more adjacent residential lots, house and lots or other residential dwellings are sold or disposed in favor of one buyer from the same seller, for the purpose of utilizing the lots, house and lot or other residential dwellings as one residential area ,the sale shall be exempt from VAT only if the aggregate value of the said properties do not exceed P 1,919,500 for residential lots, and P 3,199,200 for residential house and lots or other residential dwelling ,Adjacent residential lots. House and lots or other residential dwellings although covered by the separate titles and /or separate tax declaration , when sold or disposed to one and the same buyer ,whether covered by one or separate Deed/s of conveyance , shall be presumed as sale of one residential lot, house and lot or residential dwelling.
This however, does not include the sale of parking lot which may or may not be included in the sale of condominium units. The sale of parking lots in a condominium is a separate and distinct transaction and is not covered by the rules on threshold amount not being a residential lot. House and lot or a residential dwelling, thus, should be subject to VAT Regardless of amount of selling price.
SECTION 4 REPEALING CLAUSE, -All existing rules and regulation other issuances or parts thereof which are inconsistent with the provision of these Regulation are hereby modified. amended or revoked accordingly.
SECTION 5. EFFECTIVITY, - These Regulation shall take effect after fifteen  days following complete publication in a newspaper of general circulation in the Philippines.
Post date: Jul 13, 2017 2:13:03 AM
Philippine Real Estate Laws Ownership, Practice, Taxes
FUNDAMENTALS OF PROPERTY OWNERSHIP, REAL ESTATE PRACTICE & TAXES
Real Estate Ownership
CONCEPT OF OWNERSHIP
Ownership is the independent right of a person to the exclusive enjoyment and control of a property including its disposition and recovery subject only to the restrictions established by law and rights of others.
RIGHTS INCLUDED IN OWNERSHIP
Fee simple consists of the so called “bundle of rights” which are inherent in or appurtenant to ownership, without any limitations or restrictions other than those imposed by law or contract. The bundle of rights include the following: 1) Right to possess 2)Right to use and enjoy 3) Right to the fruits 4) Right to dispose 5) Right to vindicate or recover
LIMITATIONS ON RIGHT OF OWNERSHIP
1) Those imposed in general by the State in the exercise of the power of taxation, police power, and power of eminent domain.
2) Those imposed by law such as legal easement, requirement of legitimate succession, zoning, building code, rent control, urban and agrarian reform, subdivision regulations, escheat.
3) Those imposed by the grantor of the property on the grantee by contract, such as donation, last will, or usufruct.
4) Those imposed by the owner himself, such as voluntary easement, lease, mortgage.
SURFACE, SUBSURFACE AND AIR RIGHT
Land, in its legal signification, extends from the surface downwards to the center of the earth and extends upwards indefinitely to the skies. The surface and subsurface of rights of an owner entitle him to construct thereon any works or make any plantations and excavations without detriment to servitudes and special laws. Air right is the right of an owner to use and control the air space over his land subject to the requirements of aerial navigation, laws, or contract.
RIGHT TO HIDDEN TREASURE
Hidden treasure belongs to the owner of the land, building, other property on which it is found. When the discovery is made on the property of another, or of the State or any of its subdivisions, and by chance, one-half of the treasure shall be allowed to the finder. If the finder is a trespasser, he shall not be entitled to any share of the treasure. If the things found be of interest to science or arts, the State may acquire them at their just price, which shall be divided in conformity with the rule above stated. Hidden treasure, for legal purpose, is understood to be any hidden unknown deposit of money, jewelry, or other precious objects, the lawful ownership of which does not appear.
RIGHTS OF ACCESSION
1) In General – The ownership of property gives the right by accession to everything which is produced thereby, or which is incorporated or attached thereto, whether naturally or artificially.
2) With Respect to Produce of Property – To the Owner belongs the:
a) Natural fruits – the spontaneous product of the soil
b) Industrial fruits – those produced by land cultivation or labor
c) Civil fruits – the rental income of buildings and /or lands
3) With Respect to Immovable Property:
a) The owner of the land on which anything has been built, sown or planted in good faith shall have the right:
aa) To appropriate as his own the works, sowing or planting after payment of indemnity provided by law, or
bb) To oblige the builder or planter to pay the price of the land. However, the builder of planter cannot be obliged to pay for the land if its value is considerably more than that of the building or planting. In such case, he shall pay reasonable rent if the owner does not choose to appropriate the building after proper indemnity. The parties shall agree on the terms of the lease and in case of disagreement, the court shall fix the terms thereof.
b) The owner of the land on which anything has been built, planted or sown
In bad faith may:
aa) Demand the demolition of the work or removal of the planting or sowing at the expense of the builder or planter, or
bb) compel the builder or planter to pay the price of the land and the sower, the proper rent. The landowner is also entitled to damages from the builder planter or sower.
cc) To the owners of land adjoining the banks of rivers belong the accretion which they gradually receive from the effects of the current of the water.
dd) Whenever a river, changing its course by natural causes, opens a new bed through a private estate, the new bed shall become a public dominion.
Modes of acquiring title
Private Grant –voluntary transfer or conveyance of private property by a private owner, such as sale or donation.
Public Grant – acquisition of alienable lands of the public domain by homestead patent, free patent, sales patent, or other government awards.
Involuntary Grant – acquisition of private party against the consent of the former owners, such as foreclosure sale, execution sale, or tax sale
Inheritance – acquisition of private property through hereditary succession
Reclamation - filling of submerged land, subject to existing laws and government regulations.
Accretion – acquisition of more lands adjoining the banks of rivers due to the gradual deposit of soil as a result of the river current
Prescription – acquisition of title by actual, open, continuous, and uninterrupted possession in the concept of owner for the period required by law
RIGHT TO OWN
1. General Rule – Only Filipino citizens and corporations at least 60% capital of which is owned by Filipinos are entitled to acquire and own land in the Philippines.
2. Exceptions to the General Rule – Alien acquisition of real estate in the Philippines is allowed in the following cases:
a) Acquisition before the 1935 Constitution.
b) Acquisition thru hereditary succession if the acquiree is a legal heir.
c) Purchase of not more than 40% interest in a condominium project
d) Purchase by former natural born Filipino citizens subject to limitations prescribed by B.P. 185 and R.A. 8179
3. A Filipina who marries an alien retains here Philippine citizenship (unless the law of her husband’s country makes her assume the citizenship of her husband because of such marriage) and can therefore acquire real estate in the Philippines.
ACQUISITION BY FORMER NATURAL BORN FILIPINO CITIZENS
1. Mode of acquisition is not limited to voluntary deeds (such as sale or donation) but includes involuntary deeds (such as foreclosure, execution or tax delinquency sale)
2. Maximum area that may be acquired:
a) For residential purpose – 1,000 square meters of urban or one hectare of rural land.
b) For business purpose – 5,000 square meters of urban land or 3 hectares of rural land.
Business purpose refers to the use of land primarily, directly, and actually in the conduct of business or commercial activities in the broad areas of agriculture, industry, and services, including the lease of the land but excluding the buying or selling thereof.
In case of married couple where both spouses are former natural born Filipino citizens, both of them may avail of the right provided that the total acquisition shall not exceed the maximum area allowed.
A transferee who acquired urban or rural land for residential purpose while still a Filipino citizen may acquire additional urban or rural land for residential purpose which, when added to that already owned by him, shall not exceed the maximum area allowed by law.
Rule in case of double sale: The priority of rights in case of double sale of titled property shall be governed by the following rules:
1. The buyer who acquired in good faith and was the first to register the sale shall have a better right.
2.If none of the buyers registered the sale, the buyer who acquired to good faith and was the first one in possession shall have a better right.
3. If none of the buyers registered the sale or took possession, then the buyer who acquired in good faith and has the oldest title shall have a better right
Contract of Sale and Contract to Sell
1. Distinction: In a contract of sale, there is already a transfer or ownership. In a contract to sell, there is no transfer of ownership yet but merely a mutual promise to buy and sell
. Criterion: The test to determine whether a contract is a contract of sale or a contract to sell is not the manner of payment – whether cash or installment, but whether or not there is conveyance of ownership in the dispositive or grant clause of the deed. There is transfer of ownership when the dispositive clause states that the vendor “hereby sells, transfers and conveys unto the vendee in a manner absolute and irrevocable x x x”
Rights of buyer who has paid two years or more of installments:
1. To pay, without additional interest, any installment due within the grace period which is equivalent to one month for every year of installment payment, provided that such right can only be availed of once every five years.
2.To receive a thirty-day notarial notice of cancellation before his contract can be cancelled for delinquency
Rights of buyer who has paid less than 2 years of installment
1. The grace period to pay without additional interest due is fixed as 60 days
2. For cancellation of contract due to delinquency, the buyer is only entitled to receive a 30-day notarial notice of cancellation without right to receive the cash surrender value pf his payments
Right to refund under P.D. 957 & Maceda Law
Presidential Decree 957: Right to refund applies when the developer fails to complete the development within the required period. Refund is 100% of total payments
Maceda Law: Right to refund applies as a requisite for cancellation of contract due to delinquency when the buyer has paid at least 2 years. Refund is 50% of total payments; additional 5% per year after the 5th year.
MACEDA LAW (R.A. 6552) When the buyer is delinquent in his payment
Objective: To protect installment buyers of real estate against onerous and oppressive conditions.
Applicability – Applies to sale or financing of residential estate on installment payment covered by contract to sell and not sale with mortgage, but excluding industrial lots, commercial building, and sales to tenants under R.A. 3844.
Rights of buyer who has paid two years or more of installments: a) To pay, without additional interest, any installment due within the grace period which is equivalent to one month for every year of installment, provided that such right can only be availed of once every five years. b) To receive a thirty-day notarial notice of cancellation before his contract can be cancelled for delinquency. c) To receive the cash surrender value of his total payments before his contract can be cancelled due to delinquency. The refund is equivalent to fifty percent of total payments and, after the fifth year, an additional five percent per year of installment payment, but not to exceed ninety percent of total payments. d) To transfer or assign his right to the contract e) To register or annotate his contract on the title f) To pay, without additional interest, the full principal balance of the price before the term of the contract.
Rights of buyer who has paid less than two years of installment – The buyer has practically the same rights as a buyer who has paid two years or more of instalmments, except for the following differences:
a) The grace period to pay without additional interest on any installment due is fixed at sixty days
b) For cancellation of contract due to delinquency, the buyer is only entitled to receive a thirty-day notarial notice of cancellation but without right to receive the cash surrender value of his payments.
FOREIGN OWNERSHIP OF CONDOMINIUM UNIT
In the condominium concept of ownership, absolute ownership by a foreigner is allowed not to exceed forty percent interest in the project. The unit owner is the absolute owner of the space within the interior surface of his unit, but is only a co-owner of the exterior façade of the unit.
RIGHTS OF A CONDOMINIUM UNIT OWNER
Absolute ownership of his unit
Co-ownership of land and common areas
Exclusive easement of the space of his unit
Non-exclusive easement to common areas for ingress or egress
Right to sell, lease, or mortgage his unit
Right to repair, paint, decorate the interior surface of his unit
Right to participate and vote in condominium corporation meetings
OBLIGATIONS OF A CONDOMINIUM UNIT OWNER
Pay the realty tax on his unit
Pay the insurance on his unit
Pay the shared monthly dues for maintenance of common areas/amenities/garbage disposal
Comply with use restrictions
P.D. 957 When the developer fails to complete the development within the required period
The refund is 100% of total payments less penalty interest plus legal interest of money
REAL ESTATE PRACTICE & REAL ESTATE TAXES
Capital Gains Tax - Income tax payable to the BIR for the sale, transfer, or other disposition of real estate classified as capital asset. .
Transfer Tax - A tax payable to the local government unit for sale, transfer or other disposition of real estate, whether capital or ordinary asset
Withholding Tax - A tax payable to the BIR on the sale, transfer or other disposition of real estate classified as ordinary asset.
Cost approach - a method of estimating the fair market value of an improvement by estimating present reproduction cost and deducting depreciation.
Economic life - The period during which a property can be profitably used or expected to generate more income than expenses.
Principle of diminishing returns - States that the application of more factors of production will tend to increase net income up to a certain point, beyond which the introduction of more factors of production will tend to decrease net income.
Principle of Progression - An appraisal principle which holds that the value of a property tends to be enhanced by association with superior properties
Principle of Regression - An appraisal principle which holds that the value of a property tends to be adversely affected by association with inferior properties.
Principle of Substitution - an appraisal principle which holds that the value of a replaceable property is inferred from the value of an equally desirable substitute property.
Presentation: concept – It is an orderly written or oral explanation of facts and figures that make a given property attractive to a prospect. Scope of coverage: 1. Property Identification – location, block number, lot number, lot area and dimensions, floor area, type of property, terrain, view, description of improvements, zoning classifications, facilities and amenities, titled or to be titled, price, terms, discounts, financing. 2. Advantages and benefits – quality of neighborhood, availability of public transportation, proximity to public marker / schools / hospitals, reasonableness of price. 3. For income properties – present potential income, return of investment. 4. Lot and vicinity plan, subdivision map, and pictures of the property
Demonstration: concept – It is the process of showing the property and pointing out its physical qualities and other advantages and benefits to arouse the desire to own it. Preparing for demonstration: Preparation of checklist of physical attributes and other data which may be the object of prospect’s inquiry. Update availability with the developer.
Organization of selling points to be emphasized
Anticipation of possible objections
Appointment with prospect and notice to owner
üSelection of ideal route to create a favorable impression of the neighborhood
Negotiation: concept – It is the process of reconciling the opposing views of the parties to a transaction as to price and terms. Items which should be covered in negotiation:
Price and terms and discounts
Expenses for execution and registration of sale
Date for delivery of property
Items included or excluded in a sale
Manner of payment & financing
•Update Payment of Eletricity, Water, Telephone
•Update Payment of Realty Tax
•Penalties or Forfeiture in case non-compliance
•Who is going to process the documents and deadline
•Appointments for Earnest money, or sales contract or deed f sale
*Silent objection – hesitancy of the prospect to express his objection thereby depriving the broker of the opportunity to answer or overcome it
*Presence of supposed advisers of the prospect who give negative remarks which tend to undermine the transaction
*Failure or inability to analyze prospects real need and affordability
*Promise of a prospect to call the broker which is almost always broken
*Waiting advice from spouse or relative who were not present during the tripping
*Broker’s failure to identify time wasters such as window shoppers or speculators
*Persuading the prospect to visit the developer’s office to be able to hold the property with a reservation fee
*Securing papers/documents from developers such as copy of title, lot plan, deed of restrictions, copies of reservation agreement, deed of restrictions, contract to sell, deed of sale
*Securing papers/documents from prospects such as copy of income tax returns, bank statements, certificate of employment, copy of passport, TIN, residence certificate etc
*Arrangement of appointment between parties for contract signing and payment
Non-forfeiture of Payments. No installment payment of the buyerMay be forfeited by the developer when the buyer who is not delinquent, and after due notice, desists from further payment due to failure of the developer to complete within the required period. The buyer may at his own option, be reimbursed with total amount paid including amortization interest, with interest thereon at legal rate.
Mortgage of Project – No mortgage of any lot by the project owner/developer without permit to mortgage from HLURB. Permit to mortgage may be granted upon submission of proof that the loan proceeds will be used for development and verified undertaking by the mortgagee to release from the mortgage any lot/unit whose loan value has been paid. In case a mortgage was executed by owner/developer pursuant to HLURB permit to mortgage, the buyer may at his own option, pay his installmentdirectly to the mortgagee.
Alteration of Plans – any alteration in the approved plans relating to open spaces, facilities and other forms of development require prior approval from HLURB (now LGU) and written consent of Homeowners Asscociation
Advantages of condominium Concept
Enhance affordability by fractionalizing cost of land & building
Facilities utilities, amenities and services will cost less to build and maintain
Economy in land space. Families holding title contiguous lands of say 40 or 50 square meters by obtaining adequate housing by consolidating their lots and constructing a condominium project
Enhances marketability because foreigners can buy
Multiples saleable or rentable floor areas by as many storeys put upEliminates the routinary chores of daily maintenance, security, and garbage collection associated with single-detached dwellings
Rights of unit owner
1.Absolute ownership of his unit.
2.Co-ownership of land and common areas.
3.Exclusive easement of the space of his unit.
4.Non-exclusive easement to common areas for ingress or egress.
5.Right to sell, lease, or mortgage his unit.
6.Right to repair, paint, decorate the interior surface of his unit.
7.Right to participate and vote in condominium corporation meetings.
Obligations of condominium unit owner
1.Pay the realty tax on his unit.
2.Share the realty tax on the land and common areas.
3.Pay the insurance on his unit.
4.Share the insurance on the common areas.
5.Comply with use restrictions.
6.Pay dues and assessments.
7. Give other unit owners the priority right to buy his unit (right of first refusal). If so required by the master deed.
Dues and Assessments
1.The Deed of Restriction usually provides for two kinds of assessments:
a.) Regular assessment – a monthly obligation to fund ordinary project expenses, such as security, garbage collection, repair and maintenance of the common areas, electricity and water bills on the common areas and realty tax and insurance on the common areas.
b.) Special assessment – this is imposed as the need arises, such as the need for replacement of the generator.
Extent of interest in common areas
In the absence of any provision in the master deed, all unit owners shall have equal share in the common areas. If the intent is to pro-rate the unit owners’ interest on the common areas, such fact must be expressly provided in the master deed. The interest based on floor area of ownership is arrived at by dividing the unit area by the total floor area of all condominium units.
Optional and Mandatory Requirement. The condominium corporation is optional if no unit will be sold in foreigners. However, the corporation is mandatory if some units, not exceeding forty percent interest in the project, will be sold to foreigners, in which case title to the land will be transferred in the name of the condominium corporation and thus comply with the constitutional mandate that corporations may acquire real estate provided that at least sixty percent of its capital or membership is Filipino
1.Principal Purposes: a) To hold title to the land and b) To set as the management body of the condominium project.
2.Conflict with Master Deed. In case of conflict between the articles of incorporation of the condominium corporation and the master deed of the condominium project, the latter should always prevail because:
a) It is the matter deed which gives birth in the condominium project. The project cannot exist without a master deed, but it can exist without a condominium corporation.
The condominium law specifically provides that the articles of incorporation and by-laws of the condominium corporation shall not conflict with the master deed.
REAL ESTATE TAXATION
Rate of Real Estate Tax
a) In Provinces – not exceeding one percent of assessed value.
b In Cities and Metro Manila Municipalities – not exceeding two percent of assessed value.
Special Education Fund Tax – an annual levy on real estate equivalent to one percent of assessed value which shall be in addition to the basic real estate tax
Date of Payment of basic realty tax and SEF tax:
a)May be paid in four equal quarterly installments on or before March 31, June 30, September 30, and December 31.
Payment in advance of the schedule is entitled to not more than twenty percent discount.
Delinquent payment shall be subject to interest of two percent per month but in no case to exceed thirty six months
CAPITAL GAINS TAX
Rate and Basis Tax – the rate of capital gains tax is six percent computed on the following basis:
a) Sale of Lot: - Basis is price per deed of sale or lot zonal value, whichever is higher.
b) Sale is Lot with improvement: - Basis is price per deed of sale, or lot zonal value plus improvement value, whichever is higher.
Conditions for exemption from Capital Gains Tax:
a) The seller is a natural person and the capital asset sold is his principal residence (family home).
b) The proceeds of the sale will be used to acquire / purchase construct a new family home.
c) The BIR is duly notified by the taxpayer within thirty days from the date of sale through a prescribed return, of his intention to avail of the tax exemption.
d) The tax exemption can only be availed of once every ten years.
If there is no full utilization for the proceeds of the sale, the portion of the gain presumed to have been realized from the sales shall be subject to capital gains tax
Installment Sale – A sale is considered on installment basis when the initial payment in the year of sale is twenty-five percent or less, in which case the transferor may opt to pay initially a portion of the tax in accordance with the following formula:
Initial Tax = Initial Payment x Total Tax
Transactions Subject to Withholding Tax – Sale, exchange, or transfer of ordinary asset by natural persons, corporations, estate or trust.
Rates and Basis – Computed on the same basis as capital gains tax, the rates of creditable withholding tax.
Rate of Withholding Tax
0% - When the property sold is part of an HLURB registered socialized housing project of the seller
1.5% - When the seller is habitually engaged in real estate business and the price does not exceed P500,000.00
3.0% - When the seller is habitually engaged in real estate business and the price is over P500,000.00
5.0% - When the seller is habitually engaged in real estate business and the price exceeds P 2 million.
6.0% - When the seller is not habitually engaged in real estate business.
1.Concept – A tax payable to the local government (City or Provincial Treasurer) for the sale or other disposition of real estate, regardless of classification of the property.
2.The rate is not more than one percent for properties located in cities and municipalities in Metro Manila, and not more than one-half percent for properties outside of Metro Manila.
3.Basis is the contract price or market value per tax declaration whichever is higher. However, the local government may enact an ordinance prescribing as basis the contract price or zonal value, whichever is higher.
1.On Sales – P15.00 per P1,000.00 or a major fraction thereof, computed on the same basis as capital gains tax, and payable within five days following the month when the document was notarized.
2.On Mortgages – P20.00 for first P5,000.00 and P10.00 per P5,000.00 after the first P5,000.00
On leases – P3.00 for first P2,000.00 or fraction thereof, and additional P1.00 for every P1,000.00 or fraction thereof in excess of the first P2,000.00 for each year of the term of the lease
SALIENT FEATURES OF E-VAT RELATING TO REAL ESTATE Concept : Expand Value Added Tax is an indirect tax. It can be passed on to the buyer. However, it is should be inputed or built-in the price. The sales contract cannot stipulate the “E-VAT shall be for the account of the buyer.”
Transactions subject to E-VAT
1.Sale, barter or exchange or real estate held primarily for sale to customers in the ordinary course of trade or business where the annual gross sales or invoice exceed P750,000.00, except sale by real estate dealers and/or lessors of house and lot and other residential dwellings price P1.5 Million and below.
2.Lease of real estate for commercial use when the annual gross receipts exceed P750,000.00
3.Lease of real estate for residential use when the monthly rental per unit exceeds P10,000,000 and the annual gross receipts exceed P750,000.00
Liability as non-VAT taxpayer
1.In cases where the real estate dealer or lessor is not subject to E-VAT, he shall be liable as a non-VAT taxpayer subject to three percent tax. However, he has the option to register as VAT taxpayer subject to 10% VAT with the benefit of input tax.
Commissions of real estate brokers are subject to E-VAT if the annual gross receipts exceed P550,000.00, otherwise they shall be subject to seven percent tax.
Real estate dealers are not allowed to withhold the E-VAT from commissions of real estate brokers
Computations of E-VAT payable
1.E-VAT payable = output tax (sales receipts x 1/11) less input tax (purchase receipts x 1/11)
Credit for input tax can only be availed of if the payee is VAT-registered.
Basis of E-VAT
1.Cash/Deferred payment plan – Basis is the contract price or zonal value whichever is higher. In the absence of zonal value, basis shall be market value per tax declaration or contract price, whichever is higher.
Installment Plan – Basis is actual consideration received, including interests and other charges. However, upon full payment, if the zonal value is higher than the total receipts / collection, the additional E-VAT shall be paid accordingly
Expenses for execution and registration of sale In the absence of any stipulation to the contrary, the seller shall pay for the execution and registration of the sale.