BIR Ruling [DA-252-99]

April 23, 1999 BIR RULING [DA-252-99] Sycip Gorres Velayo & Co. 6760 Ayala Avenue Makati City Attention: Atty . E . C . Alcantara Tax Division Gentlemen : This refers to your letter dated January 22, 1999 requesting on behalf of your client, WS Family Foundation, Inc. for a tax exemption pursuant to Section 30 of the Tax Code of 1997 and for registration as a donee institution pursuant to the provisions of Batas Pambansa Blg. 45, as implemented by BIR-NEDA Regulations No. 1-81, implementing Section 34(11) of the Tax Code of 1997. Documentary evidence submitted disclosed that WS Family Foundation, Inc. is a non-stock, non-profit domestic corporation duly registered with the Securities and Exchange Commission on November 19, 1998 under SEC Registration No. A1998-17172; and that the purposes which the corporation was formed are the following : LLpr 1. To engage in educational projects, including but not limited to the granting of scholarships to deserving students; the operation, maintenance and the giving of assistance to educational institutions; and the operation, establishment and promotion of training and educational programs and other similar projects; 2. To develop, initiate, support, finance or undertake programs and projects to fight against community deterioration, charitable purposes and for the upliftment of the social and economic status of the less privileged mass; 3. To engage in health projects and to extend assistance to hospitals and clinics for the purpose of providing health and medical services to the public including the underprivileged; 4. To develop, enrich and preserve Filipino/Asian Arts and Culture by promoting, understanding, cooperation and spirit of brotherhood among the different cultural and regional groups through cultural exchanges, mutual help and dissemination of information; 5. To provide, coordinate, initiate, sponsor, assist or finance programs and projects relative to the promotions and advancement of arts and culture; and 6. In general, to engage in other projects having philanthropic, charitable, social welfare, research, and social services, educational and youth development, cultural and other similar purposes. In reply, please be informed that this Office cannot as yet issue the requested ruling/certificate of tax exemption. You have to prove by actual operation for at least three (3) years that you are really an organization/association exempt from income tax under Section 30 of the Tax Code of 1997. You can file the necessary annual information return instead of an income tax return on or before April 15, of the year following the start of your operation as an exempt organization as required under Section 24 of Revenue Regulations No. 2 (Collector vs. Sinco G.R. L-9276 dated October 23, 1956). Based on such information return, we shall conduct the necessary investigation on the activities undertaken by you during the period. The determination letter of exemption shall thereafter be issued depending upon the result of our investigation. However, it is subject to the corresponding internal revenue taxes imposed under the Tax Code of 1997 on its income derived from any of its properties real or personal, or any activity conducted for profit regardless of the disposition thereof, which income should be returned for taxation. Likewise, interest income from currency bank deposits and yield or any other monetary benefit from deposit substitute instruments are subject to 20% final withholding tax as well as its interest income under the expanded foreign currency deposit system which are subject to a final withholding tax of 7% pursuant Section 27(D)(1) in relation to Section 57(B) of the Tax Code of 1997. Moreover, it is required to file on or before April 15 of each year a profit and loss statement and balance sheet with annual information return under oath, stating its gross income and expenses incurred during the year and a certificate showing that there has not been any change in its By-Laws, Articles of Incorporation, manner of operation and activities as well as sources and disposition of income. It should be understood that WS Family Foundation, Inc. shall be constituted as withholding agent of the government if it acts as an employer and any of its employee receives compensation income subject to withholding tax, or if it makes income payments to individuals or corporations subject to the expanded withholding tax provided for in Section 57(B) of the Tax Code of 1997. (BIR Ruling No. S-30-023-99 dated March 15, 1999) As regards your request for registration as a donee institution pursuant to the provision of Batas Pambansa Blg. 45, as implemented by BIR NEDA Regulations No. 1-81, as amended, implementing Section 34(II) of the Tax Code of 1997, you are required to secure an accreditation as a donee institution from the Philippine Council for NGO Certification (PCNC), 14/F 4718 Eduque St., Makati City before this Office can act on your request. prll Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue