BIR Ruling

January 18, 1967 The International Executive Service Corps 720 Fifth Avenue, New York, New York, U.S.A. Attention: Mr . Frank Pace Jr . S i r : This refers to your letter of August 16, 1966 requesting exemption of International Executive Service Corps (IESC) from payment of Philippine income tax and the filing of income tax returns. cdpr It appears that IESC is a corporation established under the Membership Corporation Law of the State of New York with principal office at 720 Fifth Avenue, New York, New York, USA; that it is a non-profit and non-stock corporation and has a tax-free status under the US laws as organized and operated exclusively for charitable and educational purposes; that its objects and well-being of the people of the world by fostering, advancing and facilitating the development and utilization of effective executive, managerial and technical skills and practices by commercial enterprises established and to be established in countries where such skills and practices are lacking or inadequate for sound economic growth; to conduct research, studies and surveys, to determine the specific requirements of such enterprises for such skills and practices, and to make available to such enterprises the needed services required by such enterprises; that its sources of income come from AID (Agency of International Development), contributions or donations from the US business sector, and receipts from project companies; that Executives who participate in IESC project serve on a volunteer basis, receiving no compensation either from IESC or from the enterprise they assist; that the enterprise assisted makes modest payment to IESC to assist in meeting the expenses of providing volunteer service in an amount not exceeding the full cost of IESC'S activities; that no part of the net income of the organization inures to the benefits of any individual and that upon dissolution of the corporation all its properties and assets, tangible and intangible, shall be distributed to such one or more corporations, community chests funds or foundations organized and operating exclusively for charitable, scientific or educational purposes. The term "charitable" is used in its broad sense, and my include the relief of poverty or distress; the advancement of religion, education or science; the lessening of the government's burdens, or the erection or care of public structures; and certain social welfare activities (P-H Federal Taxes, Vol. 2, Section 4520, 1966 ed.). And, "Broadly, a charitable use or purpose may, where neither law or public policy forbids, be applied to almost anything tending to promote the well being of social man, but the use or purpose must be public, as distinguished from a private one, for the benefit of the public at large or of a portion thereof or for the benefit of an indefinite number of persons (CSJ, Vol. 14, p. 439). prcd In view of the foregoing, this Office is of the opinion and so holds that the International Executive Service Corps is an exempt organization within the purview of Section 27(e) of the National Internal Revenue Code. Accordingly, it is exempt from the payment of income tax and the filing of the corresponding income tax return. The IESC is, however, 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 as well as sources and disposition of income pursuant to Revenue Regulations No. 7-64 dated November 4, 1964. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue of the Philippines