Real Estate Business Forum, Inc.

October 5, 2008 BIR RULING [DA-(VAT-013) 275-08] DA328-06 Real Estate Business Forum, Inc. 15/F Room 1503 Tower 1 PSE Plaza Ayala Triangle, Ayala Avenue Makati City Attention: Mr. Roberto A. Chan Treasurer Gentlemen : This refers to your letter dated January 23, 2007 stating that the Real Estate Forum, Inc. is a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. ANO95-00122 dated January 12, 1995; that it is organized primarily for the purpose(s) ECaAHS 1. To make studies and assist the government authority to undertake research activities regarding issues affecting the real estate industry and undertake other necessary activities that will benefit the industry; to serve as a venue where issues affecting the real estate industry are thoroughly discussed and acted upon in coordination with the proper government authority; 2. To receive, accept and hold property, real or personal, by purchase, lease, contract, concession, gift, device, bequest or otherwise, including those that may be given by members as may be necessary in the furtherance of the objectives of the association. In connection therewith, you now request for an opinion that association dues and other assessments/charges collected from the members are exempt from the payment of income tax and value-added tax (VAT). In reply thereto, please be informed that the Association's receipts of the association dues and other assessments/charges collected from the members which are merely held in trust and used solely for administrative expenses and from 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, the Association's collections used solely for administrative expenses in implementing its corporate purposes are not subject to income tax or any withholding tax. Section 105 of the Tax Code of 1997, VAT is collected upon any person, who in the course of 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 or a commercial or an economic activity, including transactions incidental thereto, by any person regardless of 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. Considering that the Association does not sell, barter, exchange, lease 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 its members pursuant to its corporate purposes as 'trustee' for the fund thereof, it is not subject to the VAT on such activity. (BIR Ruling Nos. DA008-00 dated January 5, 2000 and DA196-01 dated October 17, 2001) AHaDSI IN VIEW OF THE FOREGOING, the Association is not subject to income tax and consequently to withholding tax on its collection of association dues, membership fee and other receipts/miscellaneous fees. The Association's receipts of the collections are exempt from VAT. Finally, the Association only acts as the collecting agency to pool the respective shares of the unit owners 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, hence, not subject to VAT. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service