BIR Ruling

May 6, 1975 Mr. Gonzalo Santos Rivera Counselor The Philippine National Red Cross Manila Chapter Corner Victoria-Gral. Luna Sts. Intramuros, Manila S i r : This refers to your letter dated April 7, 1975 informing this Office that your Chapter is intending to organize a Foundation which will generate funds for your Chapter in the performance of the latter's charitable and humanitarian activities; that the Foundation intends to construct a building for its own purposes but a part of which will be leased to the public, and that the rentals to be derived from the lease will be utilized by your Chapter of the Philippine National Red Cross. You now request information whether the Foundation would be subject to internal revenue taxes. In reply, I have the honor to inform you that, under the foregoing facts, the proposed Foundation is considered a charitable organization; hence, it will be exempt from income tax upon compliance with the pertinent internal revenue laws and regulations on the matter. However, with respect to the rentals to be derived by the Foundation, the same shall be subject to income tax. Moreover, for leasing its building, the Foundation shall be considered a real estate dealer and hence, subject to the real estate dealer's fixed tax imposed by Section 182(A)(3)(aa) of the Tax Code, if said building will be rented for an aggregate amount P4,000.00 a year. cdta Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5