BIR Ruling

June 1, 1976 Exemption from Payment of Income Tax of Organization Organized for Purely Cultural Purposes ; But Income Derived from Any of Its Properties Subject to Income Tax This refers to your request for exemption from the payment of income tax and the filing of the corresponding income tax returns under Section 27 of the Tax Code. Investigation conducted by this Office disclosed that the Philippines-Japan Ladies Association, Inc.,is a non-stock, non-profit corporation duly registered with the Securities & Exchange Commission; that the purposes for which the corporation is formed are: 1. To ensure the full integration of women in the total development effort, especially by emphasizing women's responsibility and important role in economic, social and cultural development at the national, regional and international levels, 2. To maximize the role of women in the development of friendly relations and cooperation between the Philippines and Japan and among their nations thereby fostering mutual understanding among the peoples of the world; 3. To support efforts that will redound to mutually beneficial relations between the Philippines and Japan; 4. To promote, carry on, conduct and encourage the advancement and development of any or all the sciences or fields of human endeavor to further the goals of the Association; 5. To sponsor, assist, support, promote, encourage and finance activities and projects related to education, industry, economics, technology, agriculture, environment, history, sociology and humanities, to attain the objectives for which the organization was established; and 6. To encourage the exchange of information in all fields of human knowledge between the Philippines and Japan; that the cooperation shall be financed through an entrance fee for all new members in amounts to be decided by the Board and through donations, contributions and assistance from individuals, firms, corporations, domestic or foreign and from interests earned from short term commercial papers by the investment of its funds received from donations and that no part of its net income inures or may inure to the benefit of any member or individual. In view thereof, this Office is of the opinion and so holds that the Philippines-Japan Ladies Association, Inc., falls within the purview of an organization organized for purely cultural purposes as contemplated by Section 27(e) of the Tax Code. Accordingly, it is exempt from the payment of income tax. It is, however, subject to income tax on income derived from any of its properties real or personal or any activity conducted for profit, regardless of the disposition made of such income. Such being case, that corporation is required to file income tax returns declaring therein its interest income, which are subject to income tax. Moreover, it is required to file on or before April 15, of each year, a profit and loss statement and balance sheet with the annual information return under oath, stating its gross income and expenses incurred during the preceding year and a certificate showing that there has not been any change in its By-Laws, Articles of Incorporation, manner of operations and activities as well as sources and disposition of income. techasia