BIR Ruling No. 033-10

August 25, 2010 BIR RULING NO. 033-10 30 (E) of the Tax Code of 1997; BIR Ruling No. 190-83 Kanlungan ng Buhay, Inc. 116 Santillan Apts. 7441 Santillan Street Barangay Pio del Pilar Makati City Attention: Mr. Victor G. Puyat President Gentlemen : This refers to your letter dated March 24, 2010 requesting for a ruling that the KANLUNGAN NG BUHAY is exempt from the payment of income tax and the filing of the corresponding income tax return pursuant to Section 30 of the Tax Code of 1997. IaDTES Documentary evidence submitted to this Office disclosed that the KANLUNGAN NG BUHAY, INC. with TIN 006-650-715-000 is a non-stock non-profit corporation duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. 200702977 dated March 8, 2007; and that the primary purpose(s) for which it is organized are as follows: 1. To undertake HRD/Training to transfer skills and technology; 2. To design advocacy and other information programs to defend, enhance and promote Filipino family values; 3. To assist various sectors in need of skills, expertise and intermediate technologies. and that no part of the income which the corporation may obtain as an incident to its operation shall be distributed as dividends to its members, trustees or officers. Based on the foregoing, this Office is of the opinion and so holds that the KANLUNGAN NG BUHAY, INC. is a corporation organized for charitable purposes as contemplated under Section 30 (E) of the Tax Code of 1997. Accordingly, it is exempt from the payment of income tax on income received by it as such organization, and therefore, need not file an income tax return concerning such income. However, THE KANLUNGAN NG BUHAY, INC. is subject to the corresponding internal revenue taxes imposed under the National Internal Revenue Code on its income derived from any of its properties, real or personal, or any activity conducted for profit regardless of the disposition thereof, which income should be returned for taxation. (BIR Ruling No. 015-95 dated February 9, 1995) Likewise, interest income from currency bank deposits and yield or any other monetary benefits from deposit substitute instruments and from trust funds and similar arrangements, and royalties derived from sources within the Philippines are subject to the 20% final withholding tax: Provided, however, that interest income derived by it from a depository bank under the expanded foreign currency deposit system shall be subject to 7 1/2% final withholding tax pursuant to Section 27 (D) (1), in relation to Section 57 (A), both of the Tax Code of 1997. Moreover, THE KANLUNGAN NG BUHAY, INC. is required to file on or before the 15th day of the fourth month following the end of the accounting period a Profit & Loss Statement and Balance Sheet with the Annual Information Return under oath, stating its gross income and expenses incurred during the preceding period and a certificate showing that there has not been any change in its By-Laws, Articles of Incorporation, manner of operation and activities as well as sources and disposition of income. (BIR Ruling No. [NSNP-(S30G-016) 125-09] dated February 24, 2009) ASHICc It should be understood that the said exempt organization shall be constituted as withholding agent of the government if it acts as an employer and its employee receives compensation income subject to the withholding tax under Section 79 (A), Chapter XIII, Title II of the Tax Code of 1997, as implemented by Revenue Regulations No. 2-98, as amended, or if it makes income payments to individuals or corporations subject to the expanded withholding tax provided for in Section 57 (B) of the Tax Code of 1997, also as implemented by Revenue Regulations No. 2-98, as amended. (BIR Ruling No. DA-252-99 dated April 23, 1999) Under Section 235 of the Tax Code of 1997, any provision of existing general and special law to the contrary notwithstanding, the books of accounts and other pertinent records of tax-exempt organizations or grantees of tax incentives shall be subject to examination by the BIR for purposes of ascertaining compliance with the conditions under which it has been granted tax exemptions or tax incentives, and its tax liabilities, if any. Finally, it is subject to the payment of the annual registration fee of P500.00 as prescribed in Section 236 (B) of the Tax Code of 1997, as amended. It is also required under Section 6 (C) in relation to Section 237 of the same Code to issue duly registered receipts or sales or commercial invoices for each sale or transfer of merchandise or for services rendered which are not directly related to the activities for which the Association is registered [Revenue Memorandum Circular (RMC) No. 76-2003]. 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.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue