Wynsum Condominium Corporation

March 5, 2009 BIR RULING [DA-(C-032) 137-09] R.A. No. 4726; DA-126-00 Wynsum Condominium Corporation 3/F Wynsum Corporate Plaza F. Ortigas Jr. road, Ortigas Center, Pasig City Attention: Mr. Dominador S. Santos, Jr. Property Manager Gentlemen : This refers to your letter dated November 10, 2008 requesting for confirmation of your opinion that no income tax and creditable withholding tax is due on the condominium dues and other assessments being collected by the Corporation from its members. SIAEHC It is represented that Wynsum Condominium Corporation (the "Corporation"), with Taxpayer Identification No. 005-693-467-000, 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. A199808636 dated July 2, 1998; that the primary purposes for which it was organized are to own and hold title to the land and common areas of the Wynsum Condominium Project (the "Project") and to maintain, operate and manage the Project pursuant to and in accordance with the provisions of the Condominium Act and the Master Deed; that according to its Articles of Incorporation, all assessments or charges against the members thereof to meet or defray the costs and expenses of the Condominium Project and the Corporation, and such other reasonable expenses necessary or proper for the management, administration, maintenance and/or preservation of the Condominium project; and that no part of the Corporation's income is distributable to any of its members, directors or officers. In reply, please be informed that generally, income earned by domestic corporations is subject to the 32% (30% effective January 1, 2009) regular corporate income tax. Nevertheless, collections of association dues and other assessments being paid by unit owners for the maintenance of common areas of a condominium building is not subject to income tax since no income is generated therefrom. (BIR Ruling No. DA-126-00 dated February 24, 2000 and BIR Ruling DA 196-01 dated October 17, 2001). The receipt of condominium dues from the unit owners which are merely held in trust and which are to be used solely for administrative expenses, utilities and maintenance of the common areas for the benefit of the said unit owners and from which the Corporation could not realize any gain or profit are not includible in the Corporation's gross income. Hence, the same is not subject to income tax and consequently to the creditable withholding tax. (BIR Ruling No. 103-94 dated May 16, 1994; DA-470-98 dated November 3, 1998; BIR Ruling DA-008-00 dated January 5, 2000; and BIR Ruling DA-362-00 dated October 23, 2000) 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. ASDCaI Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service