Exemption from the Value-Added Tax

March 22, 1989 BIR RULING NO. 042-89 24 (6) 000-00 042-89 Gentlemen : This refers to your letter dated October 26, 1987 stating that you were organized by the unit owners of your condominium project solely for the administration and maintenance of your building; that you were set up as a non-stock, non-profit corporation which has no income whatsoever; that you are not engaged in any kind of business or profit-earning endeavor; and that funds in the form of association dues are contributed by the unit owners which are used for the administration and the maintenance of the building. cdta In connection therewith, you now request a ruling on the following queries: 1. Is your corporation subject to the value-added tax or to any other business tax; and 2. Is your corporation subject to income tax and/or the filing of income tax return pending the BIR Ruling on your application for tax exemption? In reply, please be informed as follows: 1. Under Section 99 of the Tax Code as amended by Executive Order No. 273 and effective January 1, 1988 any person who in the course of trade or business, sells, barters or exchanges goods, renders services, or engages in similar transactions and any person who imports goods shall be subject to the value-added tax (VAT) imposed in Sections 100 to 102 of the same Code. Such being the case, you are not subject to the value-added tax, if you do not sell goods, or render any service in the course of trade or business. 2. The present internal revenue law under Executive Order No. 273 effective January 1, 1988, no longer impose any other business tax. Accordingly, you are not subject to any business tax, except VAT. 3. An association formed by the unit owners of a condominium project to provide for the management, maintenance and care of all areas in their condominium project was denied exemption as a social welfare organization (34 Am. Jur. 2d: 1976 Ed., p. 690). Consequently, you should file an income tax return and pay income tax on your net income. (BIR) Ruling No. 027-g-277-86 dated December 18, 1986) Very truly yours, (SGD.) JOSE U. ONG Commissioner