THE substitute bill on the first package of tax reforms approved by the House Committee on Ways and Means ensured that safeguards are in place to protect low-income earner who are renting their place of abode and small property owners from the impact of tax reform, a finance official said.
“Instead of handing over VAT exemptions to big housing developers and their well-to-do clients who can well afford to pay the tax, the proposed CTRP will instead give the privilege directly to low-income families in the form of cash vouchers so that they can save up to buy their own homes,” said Finance Undersecretary Karl Kendrick Chua said in a statement on Friday.
An expanded value-added tax (VAT) base is part of the proposals under Comprehensive Tax Reform Package (CTRP).
“For those who can afford, they have lower income taxes to help them purchase their houses,” Chua said.
Apartment and other real property rentals of P10,000 and below will remain VAT free. Condos and other housing units with gross sales receipts under P3 million, will also be exempt from VAT under the first package of the CTRP, Chua said.
The old VAT threshold of P1.9 million based on gross sales will be raised to P3 million under House Bill (HB) 5636, the substitute CTRP bill also known as the Tax Reform for Inclusion and Acceleration Act (Train) that is currently undergoing plenary deliberations at the House of Representatives.
Middle-income buyers will have significantly lower personal income tax rates under enabling them to afford buying slightly pricier houses.
The substitute bill or HB 5636 removes the VAT exemptions specified in special laws, except on raw food, health and education and the privileges given to seniors and persons with disabilities.
HB 5636 consolidated the mother bill—HB 4774—authored by Rep. Dakila Carlo Cua of Quirino province, who chairs the committee, with 54 other tax reform measures.