Betsaida Neighborhood Association, Inc.

December 24, 2008 BIR RULING [DA-(C-185) 576-08] 30 (J); DA-746-06 Betsaida Neighborhood Association, Inc. Brgy. Mambugan, Antipolo City Attention: Ms. Divina Z. Briol President Gentlemen : This refers to your letter dated March 10, 2008, as indorsed by Revenue District No. 45, Marikina City, requesting for exemption from taxes as a non-stock and non-profit organization. AIHaCc Documents submitted to this Office disclosed that Betsaida Neighborhood Association, Inc. (BNAI) is a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission (SEC) under Company Reg. No. CN200516448 dated September 27, 2005. In reply, please be informed that BNAI may fall within the purview of organization of a purely local character, the income of which consists solely of assessments, dues, and fees collected from members for the sole purpose of meeting its expenses under Section 30 (J) of the 1997 Tax Code. Accordingly, it is exempt from the payment of income tax on income received by it as such organization (BIR Ruling No. DA-746-06 dated December 29, 2006), and therefore, need not file an income tax return concerning such income. BNAI's receipts of association dues and other assessments/charges collected from its members, which are merely held in trust and used solely for administrative expenses in order to protect and safeguard the welfare of the owners, lessees and occupants of the property, provide utilities and amenities, the maintenance of services and management, and which the Association could not realize any gain or profit as a result of its receipt thereof, are not includible in said Association's gross income. Accordingly, BNAI's collections which are used solely for administrative expenses in implementing its corporate purposes are not subject to income tax or any withholding tax. Moreover, BNAI's receipts of the aforesaid "collections" are exempt from the value-added tax (VAT) since the Association does not sell, barter, exchange, lease goods or property and neither does it render service for a fee in accordance with Section 105 of the Tax Code of 1997 but only acts as collecting agency to pool the respective shares of the members of the Association and merely implement the administration of the required services pursuant to its corporate purposes as trustee of the funds thereof for payment of common expenses. (BIR Ruling No. DA-426-2004 dated August 10, 2004 and BIR Ruling No. DA-362-2000 dated October 23, 2000) Should BNAI, however, engage in business for profit, any profit realized from such activities is subject to income tax and to the 12% VAT or 3% percentage tax, as the case may be. IDSETA 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 as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service