Lady solon seeks suspension of 12% VAT on low-cost housing

Published November 8, 2020, 12:37 PM

by Charissa Luci-Atienza 

Citing that a home has never been more important in this time of COVID-19, House Deputy Majority Leader Bagong Henerasyon party-list Rep. Bernadette Herrera has sought the suspension of the anticipated imposition of 12 percent Value-Added Tax on low-cost housing next year.


She said the Department of Finance should consider suspending the VAT on low-cost housing which is expected to take effect on Jan. 1 under Republic Act 10963 or the Tax Reform for Acceleration and Inclusion law.

“We are hoping that the DoF, led by Secretary Sonny Domiguez, will find a way to help low-cost housing developers and buyers by directing the Bureau of Internal Revenue to suspend the VAT on the sector until this public health crisis is over,” Herrera said.

She recalled that low-cost housing has been given a three-year reprieve or until Dec. 31 this year from VAT payment under TRAIN law.

Herrera backed the appeal made by the Chamber of Real Estate and Builders’ Associations Inc. to suspend VAT on low-cost housing.

“The suspension will also provide the country’s real estate and housing industry the much-needed economic stimulus to fully and immediately recover from the effects of the pandemic.”

The party-list lawmaker noted that once the reprieve lapses on Dec. 31, the TRAIN law would only exempt buyers of residential lots worth P2 million and below from VAT payment by next year.

Herrera said lower middle-income Filipinos will be deprived of having their own homes if VAT on low-cost housing will be imposed.

“Many Filipinos who were forced to defer plans to buy homes due to the pandemic would suffer the brunt of the VAT on low-cost housing,” she said.

Quoting CREBA, she said the 12 percent VAT of about P360,000 for a P3.2-million home actually translates to P1 million over a 30-year mortgage life.

CREBA had warned that the VAT imposition would cause a massive housing industry slowdown because it would result in surge in housing prices beyond the affordability of the targeted beneficiaries, including overseas Filipino workers.

“Unfortunately, real estate developers have no choice but to fully pass on VAT to home buyers. That added cost unfairly burdens people who obtain their low-cost housing units through a long-term loan,” Herrera said.

She said such scenario would further contribute to the country’s 6.57 million housing shortfall that grows by at least 300,000 more units each year.

“With COVID-19, making homes in decent and safe communities is not only necessary but a matter of survival,” she said, reminding that the 1987 Constitution recognizes housing as a basic human right.

“The right to adequate housing ensures that people enjoy physical and mental health and live in a safe place in peace and dignity.”