BIR Ruling

October 1, 1973 Messrs. Belo, Gozon & Abiera 6th Floor, PAL Building 6780 Ayala Avenue Makati, Rizal Gentlemen : This refers to your letter dated September 15, 1973 applying for the exemption of your client, Community Crafts Association of the Philippines, Inc. under Section 27 of the Tax Code, pursuant to Section 24 of the Income Tax Regulations. cdta It appears from the Articles of Incorporation and By-Laws of your client and from the Affidavit of its President, Mr. Antonio R. Infante, that the purposes for which the Association was organized essentially consist of the following: 1. To provide its members which are non-profit groups and organizations engaged in social development work throughout the Philippines with common services, pooled resources and facilities particularly in the field of marketing research and the domestic and export marketing of the handicraft products turned out by the projects of its member organizations in underprivileged communities throughout the Philippines; and 2. Its activities include (a) studies and surveys of its members' facilities, resources and production capabilities; (b) development of market outlets for handicraft products and selling the same to interested buyers locally and abroad; (c) training sessions and seminars for the benefit of its members, in various subjects such as simplified cost accounting, management planning and control and pricing of handicraft products; (d) centralized purchasing of raw materials; and (e) printing of an integrated product catalogue. The Association derives its fund from grants from other foundation and contributions from its members based on the nature of the services rendered to them ranging from 5% to 10% of the value of the products sold thru the Association and 3% of the value of raw materials purchased on behalf of the members. No income of the Association inures or will inure to the benefit of any individual, and any surplus that should arise from the operations of the Association shall be applied to improve and expand the services rendered to the members or as patronage refund based on the amount of sales or purchases effected thru the Association. No salaries, wages, per diems or any compensation is paid to the members of the Board of Trustees nor to its President and Chairman, Vice-President, Treasurer and Corporate Secretary. Only the professional staff and employees of the Association are compensated for their services. In reply, I have the honor to inform you that Community Crafts Association of the Philippines appears to be an organization not organized for profit but operated for the promotion of social welfare, and, as such, it is exempt from income tax with respect to income derived by it as such pursuant to Section 27(g) of the Tax Code. However, the Association is required to file on or before April 15, of each year an 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 substantial change in its By-Laws, Articles of Incorporation, manner of operation and activities as well as sources and disposition of income. cdtech Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5