BIR Ruling [DA-506-03]

December 15, 2003 BIR RULING [DA-506-03] Rev. Regs. No. 2 Phil. Institute of Certified Public Accountants PICPA Building 700 Shaw Boulevard Mandaluyong City Attention: Ms. Teresita M. Tapales Chief Accountant Gentlemen : This refers to your letter dated June 3, 2003 requesting for a ruling on whether seminar fees are subject to E-VAT; and a certificate of tax exemption. It is represented that the Philippine Institute of Certified Public Accountants ("PICPA") is a non-stock, non-profit organization which has for its primary purpose of servicing its members; that you are registered as a non-VAT taxpayer as to the service of your members and as VAT as lessor for a building space, Union Bank is occupying of which you receive a rental income subject to tax; that your sources of income are membership dues, seminars and conventions, donations and contributions and subscription of Accountant's Journal; that the purpose of your seminars is to give members and other people in the accounting profession the latest updates and professional developments on matters in relation to their profession as to government, education, public practice and commerce and industry; that the cost of venue/food and meals, materials and other expenses incurred during the seminars are deducted from fees collected; and that your certificate of tax exemption issued by the BIR was misplaced and cannot be located. In reply, please be informed that Section 30 of Revenue Regulations No. 2 provides, viz : "xxx xxx xxx The income of such corporation which is considered as income from their properties, real or personal, generally consists of income from corporate dividends, rentals received from their properties, interests received from capital loaned to other persons, income from agricultural lands owned by such corporations, profits from the sale of property, real or personal, and other similar income. Income not derived from their properties, real or personal, are exempt. For example, in the case of a religious corporation, income from the conduct of strictly religious activities, such as fees received for administering baptismals, solemnizing marriages, attending burials, holding masses, and other like income, is exempt. However, if such exempt income is invested by the corporation, the income from such investment, as interests from the capital where the capital has been loaned or dividends on stock where the capital has been invested in shares of stock, will constitute taxable income . . ." In view of the foregoing, seminar fees are exempt from income tax. However, if such is invested by the corporation, the income from such investment is taxable. Our records show that there is no NGO with the name of Philippine Institute of Certified Public Accountants ("PICPA") which has been issued a certificate of tax exemption by this Office. However, an NGO with the name of PICPA-KSA Scholarship Foundation, Inc. has been issued certificate of tax exemption under BIR Ruling No. S30-197-94 dated June 20, 1994 and BIR Ruling No. S30-12-98 dated February 13, 1998. You may apply for a certificate of tax exemption by submitting to the following: 1) Letter request; 2) SEC Registration; 3) Articles of Incorporation indicating a. sources of income b. purposes c. that the members of the Board of Directors/Trustees will not receive compensation/fixed remuneration d. that all funds of the foundation shall belong to the organization and no part of the net income shall inure to the benefit of any of the Board of Directors/Trustees or private individuals e. in case of dissolution, assets of the corporation shall belong to similar institution or to the Government; 4) By-laws; 5) Financial Statements (balance sheets) for the last 3 years; and 6) Annual Information Returns for the last 3 years Please be guided accordingly. aAEIHC Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group