BIR Ruling [DA-196-01]

October 17, 2001 BIR RULING [DA-196-01] Tagaytay Country Homes IV Homeowners' Association, Inc. 2/F, Cityland Condominium 10 Tower I 6815 Ayala Avenue, Makati City Attention: Ms. Ma. Lilia T. De Guzman Corporate Secretary Gentlemen : This refers to your letter dated June 26, 2000 requesting for a exemption from the payment of income tax and the filing of the corresponding Income Tax Return in favor of your association. Documents show that Tagaytay Country Homes IV Homeowners' Association, Inc. is a non-stock, non-profit organization incorporated and registered with the Home Insurance Guaranty Corporation (HIGC) under HIGC Registration No. 04-3338 dated May 21, 1996. In support of your request, you submitted photocopies of the following documents: 1) Articles of Incorporation 2) By-Laws 3) Registration with the BIR as a withholding agent and a corporation 4) 1997-1999 Income Tax Return and 5) Month Ended December 31, 1996 and Year Ended December 31, 1998 to December 31, 1999 Financial Statements We regret to inform you that your request for tax exemption is denied for lack of legal basis. A condominium corporation or homeowners association is not among those enumerated as exempt from payment of income tax under either Section 30 of the Tax Code of 1997 or Republic Act No. 4726. In this connection, you are further advised that the collections being paid by your tenants for the maintenance of common areas of the condominium building is not subject to income tax since no income was generated. However, the sale of janitorial services and other related services shall be subject to value-added tax but the act of "collection" by the association from the tenants of their respective shares in the payment of said services is not itself subject to VAT. For this purpose, any input tax evidenced by a VAT invoice or official receipt issued by a VAT registered person in accordance with Section 113 of the Tax Code of 1997 is creditable against the output tax upon payment of such service. (BIR Ruling No. 71-97 dated December 4, 1997) Very truly yours, Commissioner of Internal Revenue (SGD.) MILAGROS V. REGALADO Acting Assistant Commissioner Legal Service