BIR Ruling

December 8, 1976 Tax Exemption for Non-Profit Organization This refers to your request on behalf of your client the Las Buenas Planters' Association, Inc., Negros Occidental, for exemption from the payment of income tax and the filing of the corresponding income tax return under Section 27(a) of the Tax Code. Investigation conducted by this Office disclosed that the Las Buenas Planters' Association, Inc.,formerly Central Association, Incorporated, (hereinafter referred to as the Corporation) is a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission; that the purposes for which the Corporation is formed are: 1. To promote better understanding and relations between the planters and millers, and to secure a just and equitable application and interpretation of the laws and regulations obtaining in the Philippine sugar industry; 2. To promote the continued development and improvement of the Sugar industry and its allied technology in the Las Buenas sugar district, and to adopt and execute rules and regulations for such purposes; 3. To solicit, or render assistance to its members in the procurement of crop loans from the Central, or from any persons, natural or juridical, or financing institutions, with which to purchase fertilizers or equipment to insure or promote better crops; 4. To assist and advise planters in their fight against plant and animal diseases, to effect ways and means to control and/or eradicate them; 5. To help in research studies or experiments to promote the advancement of the Philippine sugar industry and its allied technology; that the corporation derives income principally from fees regularly collected from the members which is 1% of the gross sugar production, and from special dues as may be assessed in accordance with their by-laws for funding of special projects; that with the exception for interest which was earned as an incidence to the deposit of the Corporation's funds in banks, all other income are derived from membership assessment fees as regular dues or special assessments which are paid in cash or in kind; and that no part of the net income of the Corporation inures or accrues to the benefit of any private stockholder or individual. cdtech Based on the foregoing facts, this Office believes and so holds that the Las Buenas Planters' Association, Inc., Negros Occidental, 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.