BIR Ruling [DA-430-03]

November 28, 2003 BIR RULING [DA-430-03] S30 (C) #238-90; 223-90; DA-26-98; DA-74-2001 BIR Employees Association, Inc. Rm. 708, 7th Floor, BIR Building, Diliman, Quezon City Attention: Atty. Percival T. Salazar President Gentlemen : This refers to your letter dated November 20, 2003 requesting for exemption from the payment of income and business taxes of the proceeds derived from the sale of "2004 BIR Tax Calendar" to the general public. The proceeds thereof shall be used to defray the refurbishing of swimming pool, gymnasium, basketball court, tennis court that will promote the welfare of your member-employees. It is represented that the BIR Employees Association, Inc. is a non-stock, non-profit organization created and existing under Philippine laws for a long time now. Its membership is composed of bona fide BIR employees. It was established primarily to promote and uplift the welfare, economic and social well-being of the BIR employees. It is out of this social concern that you would like to implement several projects that will be beneficial to all your members. In your last Special Board Meeting held on November 14, 2003, the Board discussed the possibility of producing and selling tax calendars to the public. It has also been agreed in the said meeting that proceeds of the sale will be used to defray BIREA projects like the refurbishing of swimming pool, gymnasium, basketball court, tennis court and others that will promote the welfare of your employees. In reply, please be informed that under Section 30 of the Tax Code of 1997 which provides, to wit: "SEC. 30. Exemptions from Tax on Corporations . The following organizations shall not be taxed under this Title in respect to income received by them as such: xxx xxx xxx (C) A beneficiary society, order or association, operating for the exclusive benefit of the members such as a fraternal organization operating under the lodge system, or a mutual aid association or a nonstock corporation organized by employees providing for the payment of life, sickness, accident, or other benefits exclusively to the members of such society, order, or association, or nonstock corporation or their dependents;" A non-stock not-profit corporation is exempt from the payment of their income taxes derived from the conduct of their primary purposes for which they are created. Accordingly, BIREA, being a non-stock non-profit organization is exempt from the payment of income tax derived from the conduct of their purposes for which they are created. Therefore, the proceeds to be derived by the BIREA for the sale of "2004 BIR Tax Calendar" specifically intended for the refurbishing of swimming pool, gymnasium, basketball court, tennis court that will promote the welfare of the employees, are not subject to income and business taxes. Such income, however, should be declared in your annual information return to be filed on or before April 15 of the following taxable year. (BIR Ruling DA-26-98 dated January 29, 1998 and BIR Ruling No. DA-074-2001 dated April 27, 2001) IATHaS 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 as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service