BIR Ruling [DA-436-99]

July 28, 1999 BIR RULING [DA-436-99] Rangtay Sa Pagrang-ay, Inc., Unit 103, L Ogilby Centrum 258 Magsaysay Avenue 2600 Baguio City Attention: Mr. Galo D. Weygan, CPA President Gentlemen : This refers to your letter dated April 15, 1999 requesting for clarification on the following issues: 1. Since the reply of this Office mentioned in BIR Ruling No. S-30-036-99 dated March 12, 1999 is silent on the effectivity of the exemption, you presume that it is applicable from the time the organization was registered as an organization for social welfare purposes with the Securities and Exchange Commission. 2. That it is your belief that the fees collected for administration and operation are not subject to percentage tax or VAT since it is not an activity for profit but the main operation for the amelioration of the small and micro-poor family members. In reply, please be informed as follows 1. This Office hereby confirms your opinion that your organization is exempt from the payment of income tax on income received by it as such organization from the time it is registered as an organization for social welfare purposes with the Securities and Exchange Commission. The proof of exemption required by Section 24, Regulation No. 2, Department of Finance is intended to relieve the taxpayer of the duty of filing income tax return and the paying the tax. The failure to observe the requirement called for therein cannot constitute a waiver of the right to enjoy the exemption. To hold otherwise would be tantamount to incorporating into the tax laws some legislative matter by administrative regulation. ( Collector of Internal Revenue vs. V.G. Sinco Educational Corporation G.R. L-9276 dated October 23, 1956) HDICSa 2. On the other hand, you, being a non-stock, non-profit corporation and considering that no part of your net income inures to the benefit of any private stockholder or individual, fees or income derived by you as such organization shall be exempt from income tax. However, the income of whatever kind and character from any of your properties, real or personal, or from any of your activities conducted for profit regardless of the disposition made of such income, shall be subject to the taxes imposed under the tax Code of 1997, and that includes income tax, value-added tax or other percentage taxes. This constitutes our final decision on the matter. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)