BIR Ruling [DA-046-01]

March 23, 2001 BIR RULING [DA-046-01] 24; 53-98 Missionary Sisters of Saint Columban Regional House 632 Pinaglabanan St. San Juan, Metro Manila Attention: Sr . Bernadette Dolan, SSC M a d a m : This refers to your letter requesting for exemption from payment of income tax on your raffle project. It is represented that your appointment as the Regional Superior in the Philippines of the Missionary Sisters of St. Columban, Inc. is registered with the Securities and Exchange Commission under Certificate of Filing of Appointment dated December 4, 1998; that as Regional Superior in the Philippines of the missionary Sisters of St. Columban, Inc., you are charged with the administration of the temporalities and the management of the estate and properties of your religious congregation in the Philippines; that the raffle draw will be on November 25, 2001 at the Columban Sisters Convent Grounds, 632 Pinaglabanan Street, San Juan, Metro Manila at 2:00 in the afternoon; that the number of booklets to be printed is 3,500; that each booklet contains 25 tickets at P20.00 each; that sellers of the outlets shall be entitled to a ten percent (10%) commission; that you project a gross income of P1,575,000.00 (3,500 booklet x P400.00 per booklet); that the proceeds of the raffle draw are for the missions of the Columban Sisters in Asia; and that prizes will be as follows: 1st Prize - P100,000.00 2nd Prize - P 50,000.00 3rd Prize - P 25,000.00 25 Consolation Prizes of P 1,000.00 each - P 25,000.00 P200,000.00 ========== In reply, please be informed that Section 2.57-1 of Revenue Regulations No. 2-98 implementing Section 24(A) of the Tax Code of 1997 provides that: "SEC. 2.57-1 Income Payments Subject to Final Withholding Tax The following forms of income shall be subject to final withholding tax at the rates herein specified; (A) Income payments to a citizen or to a resident alien individual ; (1) . . . prizes (except prizes amounting to ten thousand pesos (P10,000 or less which shall be subject to tax under Section 24 (A) of the Code) and other winnings (except Philippine Charity Sweepstakes winnings and Lotto winnings), derived from sources within the Philippines - Twenty percent (20%)." In view of the foregoing, the 1st, 2nd and 3rd prizes which are more than P10,000.00 each, shall be subject to the 20% final withholding tax whereas the rest of the consolation prizes amounting to P1,000.00 each shall be subject to tax under Section 24(A) of the Tax Code of 1997. (BIR Ruling No. 53-98 dated May 8, 1998) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered as null and void. Very truly yours, Commissioner of Internal Revenue (SGD.) MILAGROS V. REGALADO Acting Assistant Commissioner Legal Service