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Industry players apprehensive over adverse impact of EOPT rules

Apprehension has gripped the real estate and housing industry sector as the Bureau of Internal Revenue (BIR) started issuing regulations to implement Republic Act No. 11976 otherwise known as the Ease of Paying Taxes (EOPT) Act.

Signed by President Marcos on January 25 this year, the law aims to modernize tax administration and “encourage easy compliance at the least cost and resources possible”.

However, industry leaders said that the law’s most worrisome feature is the shift from cash basis to accrual basis in the computation of the value-added tax (VAT) and other creditable withholding taxes.

They said the shift necessitates businesses to institute extensive operational changes, at considerable expense and disruptions.

They also expressed concern as to how the changes could be reconciled with the international accounting and financial reporting standards adopted and prescribed by the Securities and Exchange Commission (SEC) for Philippine real estate firms.

In a letter to BIR Commissioner Romeo Lumagui, CREBA President Noel “Toti” M. Cariño said that real estate firms are not unwilling to make those sacrifices, provided that the law’s objective of modernization and greater efficiency in tax administration will be pursued in consonance with its stated policy of safeguarding taxpayer rights and welfare.

“With this in mind, we urge the retention of existing regulations governing sales of real property, specifically RR No. 16-2005 as amended by RR No. 04-2007’” Cariño said.

Otherwise, he added, the real estate and housing industry could suffer tremendous losses, particularly considering that installment sales comprise the bulk of our transactions. Any untoward change in the regulations could mean owing the government a considerable amount of taxes even without having received the proceeds from sales.

Cariño also said that the group is seeking an urgent audience with the BIR to explore possible ways by which to attain the legislative intent without grave harm to the taxpayers.

The BIR has recently promulgated RR No. 3-2024 covering sales of services and lease of properties pursuant to the VAT provisions under the new law.

Among the transactions covered by these new rules are those between VAT-registered real property sellers and brokers, as well as leases of real property.

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Industry players apprehensive over adverse impact of EOPT rules

The real estate and housing industry could suffer tremendous losses, particularly considering that installment sales comprise the bulk of real estate transactions. Any untoward change in the regulations could mean owing the government a considerable amount of taxes even without having received the proceeds from sales.

Read More »