BIR Ruling [DA-196-04]

April 6, 2004 BIR RULING [DA-196-04] Section 27 (A) BIR Ruling No. DA-165-2002 Huerta Abesamis Torcuator & Ass. Suite 401, Cabrera Bldg. II No. 64 Timog Avenue Quezon City Attention: Atty. Dante G. Huerta Gentlemen : This refers to your letter dated September 20, 2002 requesting for a ruling on whether homeowners association of subdivisions in Metro Manila are required to pay any tax for collecting gate passes/stickers in the amount of P200.00 to P500.00 a year from car owners. CTSDAI In reply, please be informed that the "collection" by the officers of the homeowners' association from car owners is an activity conducted for profit regardless of the disposition thereof, and thus the same shall be subject to the regular corporate income tax at the rate of 35% on its net taxable income for the year 1997 and prior years. However, the marginal top rate is reduced to 34% effective January 1, 1998, 33% effective 1999 and 32% effective January 2000 and thereafter. Moreover, its income derived from the sale of goods ( i.e. , stickers) or services in the course of a business pursuit is subject to value-added tax pursuant to VAT Ruling No. 119-90 dated May 14, 1990. ( BIR Ruling No. DA-165-2002 dated September 17, 2002 ) Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group