Real estate firms at present pay the 12 percent VAT on property when it is fully sold.

Under the BIR’s proposed revenue regulation, they will be required to pay 3 percent VAT every year. If the property is paid for in cash, the seller will be required to remit the 3 percent on or before the 10th of the month following the sale and the remainder of the 12 percent on the 25th.

In the current practice, real estate firms are required to pay the entire 12 percent on the 25th of the month following the sale.

Under the proposed regulation, if the customer pays on installment, the property firm will be required to remit 3 percent VAT on the installment payments every Jan. 10 and the balance after the property is completely paid.

The BIR said the new regulation would cover only real estate companies.

A one-time sale, such of personal property, will not be covered.

The proposed regulation was presented at a public hearing at the BIR on Wednesday. In attendance were representatives of the real estate sector, including Ayala Land Inc., and members of the Chamber of Real Estate Builders Associations.

Industry players questioned the necessity of paying part of the VAT in advance.

The BIR said it would continue consulting with concerned parties to fine-tune the proposed regulation.

The National Economic and Development Authority earlier said the residential property sector grew six percent last year and construction rose 19 percent.