Greenhaven Parkhomes Condominium Corporation

June 14, 2007 BIR RULING [DA-330-07] DA-196-2001; Sec. 30 (E); Sec. 105 Greenhaven Parkhomes Condominium Corporation #319 Santolan Road Quezon City Attention: Alan Santos President Gentlemen : This refers to your letter dated September 13, 2005 requesting for an opinion from this Office concerning exemption of GREENHAVEN PARKHOMES CONDOMINIUM CORPORATION ("Greenhaven" for brevity) from income tax and VAT. It is represented that Greenhaven is a non-stock, non-profit organization whose sole income is derived from its collection of homeowners' dues which are in turn being used to pay for services provided to them. It is further represented that no profit is derived from such collection and that there are actually periods where such collection is insufficient to cover the monthly expenses. In reply, please be informed that a condominium corporation or homeowners' association is not among those enumerated as exempt from payment of income tax under Section 30 of the Tax Code of 1997. Under Section 30 (E), the said exemption only applies to "non-stock corporations or associations organized and operated exclusively for religious, charitable, scientific, athletic or cultural purposes or for the rehabilitation of veterans, no part of its net income or asset shall belong or inure to the benefit of any member, organizer, officer or any specific person". As your association is not organized for the purposes stated above, your association may be held liable for income tax under this Section. However, pursuant to BIR Ruling No. DA-196-2001, the collection of dues for the purpose of merely providing homeowners with beneficial services is not one of the contemplated activities subject to income tax since no income was generated for the association by this activity. In addition, 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 as contemplated under Section 105 of the Tax Code of 1997. CAETcH 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 null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service