CREDITABLE WITHHOLDING TAX ON SALES, EXCHANGES, OR TRANSFERS OF REAL PROPERTY

1.  As provided for in Revenue Regulations No. 1-90, and implemented
by Revenue Memorandum Circular No. 7-90, the rates of creditable
withholding tax on sales, exchanges, or transfers of real properties
have been reduced to 0%, 2.5% or 5%, for real estate transactions the
deeds of sale or transfer of which have been filed with the BIR on or
after February 1, 1990. Under said issuances, the vendor of real
property becomes entitled to zero (0%) percent only if the consideration
for the sale of the lot or house and lot per transaction does not
exceed P500 ,000 and he is registered with and certified to as engaged
in low-cost housing projects under Batas Pambansa Blg. 220
(socialized housing law) by the Housing and Urban Development
Coordinating Council (HUDCC) or the Housing and Land Use Regulatory
Board (HLURB). And when the vendor’s housing project is registered with
the above-mentioned government agency under Presidential Decree No. 957
(Open market housing law), the transaction will be subject to either
2.5% or 5% withholding tax, notwithstanding the fact that the
consideration is not more than P500.000.

2.  In order to remove the bias against the low-cost housing projects
registered under PD 957 and to simplify tax administration, all sales,
exchanges or transfers of real property on or after March 1, 1990 shall
be subject to zero (0%) percent, regardless of the law under which the
project is registered, provided that the consideration does not exceed
P500 ,000. In other words, it is the selling price or consideration and
not the law under which a project was approved, that determines whether
or not a transaction is socialized/low-cost in nature.  This is also in
conformity with the prevailing ceiling for low-income housing as set by
government housing facilities like the PAG-IBIG.

3.  To be entitled to the lower withholding tax rates of 0% or 2.5%
the presentation of the copies of the Certificate of Registration and
License to Sell for a subdivision or condominium project issued by HLURB
shall be sufficient proof for the purposes of the required HUDCC/HLURB
certification in the regulations.

4.  This Revenue Memorandum Circular, which modifies RMC 7-90 dated
January 16, 1990, shall take effect on March 1, 1990.  As in RMC 7-90,
the date of presentation of the sales documents to the BIR shall be
followed in determining the applicable withholding tax rate on the
transaction.

5.  All internal revenue officials and others concerned are hereby
enjoined to give this Revenue Memorandum Circular the widest publicity
possible.

Adopted: 16 Feb. 1990

(Sgd.) JOSE U. ONG

Commissioner of Internal Revenue