Senators unlikely to lift housing VAT exemption

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SENATORS are likely to object to a provision in the Tax Reform for Acceleration and Inclusion Act (TRAIN) bill passed by the House of Representatives that seeks to remove the value-added tax (VAT) exemption for socialized housing.

At the hearing of the Senate Ways and Means Committee on the Senate version of the TRAIN law, the panel headed by Sen. Juan Edgardo Angara tackled several sections of the bill that involves the planned lifting of VAT exemption on goods, services and lease.

The panel tackled the removal of VAT exemptions on the sale of low cost housing and residential lot valued at P1.9 million.

VAT exemption on socialized housing or those units priced at P450,000 and below will be removed upon the introduction of a housing voucher system.


Senators and other stakeholders who were present in the hearing expressed concern about the negative impact of the House bill, saying it may worsen the housing backlog.

Based on the data of the Housing and Urban Development Coordinating Council (HUDCC), the housing backlog reached 5.7 million units in 2016.

Sen. Joseph Victor “JV” Ejericto said lifting the VAT exemption could lead to more expensive housing units, making it more difficult for ordinary people to purchase houses.

He said the additional cost of building houses will be passed on to buyers by developers.
There are three types of housing units in the country — socialized, economy and low-cost.

Without VAT exemption, the cost of a socialized housing unit would go up to P500,000 from P450,000 while an economic housing unit will go up to P1.9 million from P1.7 million.

Low-cost housing amounting to P3 million is projected to increase to P3.3 million.

Industry players told members of the Senate panel that the imposition of VAT on housing will hurt buyers, particularly the overseas Filipino workers.

Angara said some senators are hesitant in adopting the House proposal.

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