Exemption from the 10% Tax on Income as a Private Educational Institution

January 7, 1988 BIR RULING NO. 002-88 24 330-871 002-88 Gentlemen : This refers to your letter dated September 18, 1987 requesting a ruling that your client, University of San Carlos, is exempt from the 10% tax on its income as a private educational institution prescribed under Section 24 (a) of the Tax Code, as amended by Executive Order No. 37; that 20% withholding tax on its interest income and/or yield on deposit substitute instruments and interest on its savings and time deposits; the customs duties and the compensating tax on its importation of books and other educational materials and equipment to be actually, directly and exclusively used for its educational purposes. cdt In reply thereto, I have the honor to inform you that paragraph 3, Section 4, Article XIV of the 1987 Constitution provides, viz: "(3) All revenues and assets of non-stock, non-profit educational institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties. . . ." The aforementioned Constitution was ratified at a plebiscite held for the purpose on February 2, 1987. Accordingly, the tax exemption privilege of non-stock, non-profit educational institutions took effect as of said date. Such being the case, the University of San Carlos being a non-stock, non-profit educational institution is exempt from taxes, e.g., 10% tax on its income as educational institution; 20% withholding tax on its interest income and/or yield on deposit substitute instruments and interest on its savings and time deposits; customs duties and compensating tax on its importation of books and other educational materials and equipment to be actually, directly and exclusively used for educational purposes. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner