BIR Ruling

May 3, 1973 Catholic Educational Association of the Philippines, Inc. 2nd Floor, Social Communications Center Bldg. R. Magsaysay Blvd. Cor. Santol St. Manila Attention: Mr . Vicente De Vera Executive Secretary Gentlemen : In reply to your letter dated January 5, 1973, I have the honor to inform you as follows: cdta 1. Before September 1, 1969, when Republic Act No. 6110 (Omnibus Tax Law) took effect, school operating school canteens whether non-profit and non-stock or not, were subject to the annual fixed tax of P20.00 and to pay 3% monthly gross receipts pursuant to Section 182(A)(1) and 191, respectively, both of the Tax Code. Upon the effectivity of Republic Act No. 6110, the annual fixed tax was increased to P50.00. Before the effectivity of said Republic Act No. 6110, school bus operators were subject to the annual fixed tax of P20.00 and to the 2% tax on their monthly gross receipts as transportation contractors in accordance with Sections 182(A)(1) and 192, respectively, both of the Tax Code. However, upon the effectivity of said Act, the annual fixed tax was increased to P50.00. For their sales of textbooks, uniforms, school supplies and other related activities, the said schools are subject to the graduated fixed annual tax prescribed in Section 182(A)(2) of the Tax Code. The initial amount of fixed tax on this business, before or after Republic Act No. 6110, is P10.00. The schools are subject to income tax before or after the effectivity of Republic Act No. 6110 on the abovementioned businesses pursued by them. 2. Schools which are exempt from income tax pursuant to Section 27(e) of the Tax Code may avail of the said exemption even if a certificates of exemption has not yet been issued to them. (Collector vs. V. G. Sinco Educational Corporation, G. R. No. L-9276, October 23, 1956). However, said schools are obliged to secure a certificate of exemption under Section 24 of Revenue Regulations No. 2, in order to remove all doubts as to the exempt status of said institutions. 3. Before and after Republic Act No. 6110 (Omnibus Tax Law), schools not exempt from income tax under Section 27(e) of the Tax Code are subject to pay a tax of 10% of their taxable net income. (Sec. 24(a), Tax Code.) Very truly yours, (SGD.) CONRADO P. DIAZ Acting Commissioner of Internal Revenue