BIR Ruling

May 27, 1976 Rev. Fr. Mario Magbanua Rector St. Joseph Seminary Puerto Princesa City Palawan Reverend Father : This refers to your request for exemption of the St. Joseph Seminary from the payment of income tax and the filing of the corresponding income tax return under Section 27(e) of the National Internal Revenue Code. In reply, I have the honor to inform you that, pursuant to Presidential Decree No. 305, beginning the calendar year 1974 and fiscal year beginning July 1, 1974, private educational institutions, whether stock or non-stock, are already subject to 10% tax on their taxable net income from the operation of the school, related school activities, and on their passive investment income consisting of interest, dividends, royalties and the like. However, prior to Presidential Decree No. 305, your school qualified for exemption from income tax under Section 27(e) of the Tax Code, it having been established that it is engaged exclusively in educational activity and that no part of its net income inures to the benefit of any individual. Therefore, pursuant to Section 24 of the Income Tax Regulations, your school was, prior to the promulgation of Presidential Decree No. 305, exempt from the filing of an income tax return but required to file an information return. However, if the School derived income from any of its properties, real or personal, or from any activity conducted for profit, it was required to file a return therefore and pay tax thereon, such income being subject to tax under Section 27(e) of the Tax Code. aisa dc Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3