BIR Ruling

July 28, 1976 Agricultural Organization Not Organized Solely for Profit, Exempt This refers to your request for exemption from the payment of income tax and the filing of the corresponding income tax return under Section 27 of the Tax Code. Investigation conducted by this Office disclosed that the Sugarcane Growers' Association, Inc., (SUGRASI), is a non-stock, non-profit association duly registered with the Securities and Exchange Commission ; that the purposes for which the Association is formed are: 1. To promote and improve the production of sugarcane in the areas or milling district having milling contracts with, or otherwise adhered to the Sugar Central Company, Inc. (SUCENCO); 2. To investigate, and make study of new methods to improve sugarcane production in the areas with a view of introducing and adopting them in the locality worked by members of the association, and to make studies in general of methods to improve sugarcane production; 3. To work for, and assist the members in the expansion of sugarcane areas with the end in view of expanding the production of sugarcane; 4. To maintain good relations with other associations or organizations existing with similar or allied purpose or purposes as a means of enhancing mutual interests; 5. To work for a just, fair and equitable treatment in their relation with the sugarcane Growers' Association, Inc., (SUGRASI), Sugar Central Co., Inc. (SUCENCO) and among one another; 6. To make suggestions and recommendations to the government or its instrumentalities or agencies towards the improvement of agriculture in general and the production of sugarcane in particular; and 7. To borrow money, in such amount or amounts as it may deem proper and/or advisable, from any lending institution or institutions for the purpose of acquiring motor vehicles and other equipment in such number or numbers as may be deemed necessary in order to enable the corporation to provide better facilities and/or mortgage any property or properties for the aforesaid purpose; that the Association is maintained from membership dues and assessment and contributions from the members and that no part of the net income of the Association insures or accrues to the benefit of any private stockholder or member. cdtech Based on the foregoing facts, the Sugarcane Growers' Association, Inc., falls within the purview of an agricultural organization not organized principally for profit as contemplated under Section 27(a) of the Tax Code. Accordingly, it is exempt from the payment of income tax and the filing of the corresponding income tax return. However, it is required to file on or before April 15 of each year a balance sheet, profit and loss statement together 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 substantial change in its by-laws, articles of incorporation, manner of operation and activities as well as sources and disposition of income.