BIR Ruling [DA-158-03]

May 14, 2003 BIR RULING [DA-158-03] Section 30 (C) BIR Ruling No. S-30-26-01 Alabang Country Club, Inc. Ayala Alabang Village Muntinlupa, M.M. Attention: Mr. Lawrence M. Jalbuena General Manager Gentlemen : This refers to your letter dated April 8, 2003 requesting for a ruling on whether membership dues are subject to income tax. It is represented that Alabang Country Club, Inc. is a corporation duly organized and existing under Philippine laws; that the Second Article of the Club's Articles of Incorporation states provides that "the purpose for which such corporation is formed are: to promote social, recreational and athletic activities on a non-profit basis among its stockholders, the core of which will be the acquisition of a polo field, golf field course and tennis courts, and other similar facilities"; that membership dues are collected by the Club from its members primarily to cover expenses related to the maintenance of the Club's facilities and premises; that any excess of membership dues over any maintenance expenses and, for that matter, special assessments are utilized for improvements in the Club's facilities; that the collection of these dues and assessments does not arise from any sale of goods or services but are imposed to cover and defray necessary expenses related to the maintenance of, and improvements in, the Club's facilities; and that as such, no part of the Club's income inures to the benefit of any of its members. In reply, please be informed that since membership dues are not income derived from real or personal property, or from any activity conducted for profit, said membership dues are not subject to income tax and consequently to the withholding tax (BIR Ruling No. S-30-26-01 dated March 28, 2001 and undated BIR Ruling No. 103-79). aEcDTC Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group