Strata 2000 Condominium Corporation

December 7, 2007 BIR RULING [DA-629-07] Sec. 105; DA-008-00; DA-426-04 Strata 2000 Condominium Corporation (Formerly: Strata 200 Condominium Corporation) Strata 2000 Bldg., F. Ortigas Jr. Road, Ortigas Center, Pasig City Attention: Mark Jordan A. Del Rosario Building Administrator S i r : This refers to your letter dated May 2, 2007 requesting for issuance of certificate of tax exemption, particularly exemption from creditable withholding tax. IDcHCS Documentary evidence submitted disclosed that Strata 2000 Condominium Corporation (Formerly: Strata 200 Condominium Corporation) is a non-stock, non-profit domestic corporation organized pursuant to the Condominium Act (Republic Act No. 4726) and duly registered with the Securities and Exchange Commission (SEC) under SEC Reg. No. 121214 dated April 3, 2000; that the primary purposes for which it was organized are as follows, viz.: 1) To own or hold title to the common areas in the condominium project; 2) To operate, manage and maintain the said Project pursuant to and in accordance with the provisions of the Condominium Act and the Master Deed, and among the secondary purposes are: to make and collect assessments against unit owners and purchasers, to defray the costs, expenses and losses of the condominium; to use the proceeds of assessments in the exercise of its powers and duties; to obtain and maintain at all times, fire insurance coverage for its benefit and that of the common areas and the unit owners and their mortgagees; to employ and/or for such managerial, legal, auditing, accounting and all other services or personnel for the proper operation of the project; to reconstruct improvements after casualty destruction or damage and to further improve the property; and to do and perform all acts and things necessary, suitable or proper for the accomplishment of any one or more of the objects enumerated or which shall at any time appear conducive to or expedient for the protection or benefit of the corporation; that as provided for in the corporation's by-laws, the unit owners (members) shall be assessed common charges in accordance with their appurtenant interest or participation in the corporation as shall be necessary to meet the common expenses, and that the position of director of the corporation shall be without compensation. THCASc In reply, please be informed that Strata 2000 Condominium Corporation's receipts of corporation dues, and other assessments/charges collected from the members, which are merely held in trust and which are to be used solely for administrative expenses in implementing its purposes i.e., to operate, manage and maintain the said condominium project, to defray the costs, expenses and losses of the condominium, and from which Strata 2000 Condominium Corporation could not realize any gain or profit as a result of its receipt thereof, are not includible in said corporation's gross income. Hence, the same are not subject to income tax and consequently, to the expanded withholding tax (BIR Ruling No. 103-94 dated May 16, 1994; DA-470-98 dated November 3, 1998). Pursuant to Section 105 of the 1997 Tax Code, as amended, value-added tax (VAT) is collected upon any person, who in the course of trade or business, sells, barters, exchanges, leases goods or properties, renders services. The phrase "in the course of trade or business" means the regular conduct or pursuit of a commercial or an economic activity, including transactions incidental thereto, by any person regardless or whether or not the person engaged therein is a non-stock, non-profit private organization (irrespective of the disposition of its net income and whether or not it sells exclusively to members or their guests), or government entity. CTDHSE Considering that the corporation does not sell, barter, exchange, nor lease any goods or property and neither does it render service for a fee but merely implements the administration of the required services to collect the association dues from the unit owners pursuant to its corporate purposes as "trustee" for the fund thereof, it is not subject to VAT on such activity. (VAT Ruling No. 026-97 dated April 1, 1997) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered null and void. TIEHSA Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service