BIR Ruling No. 050-13

January 28, 2013 BIR RULING NO. 050-13 Section 30, National Internal Revenue Code of 1997, as amended; 000-00 Changeneers Digital Corporation Unit 335 Chateau Verde Condominium, Kaimito St., Valle Verde I, Pasig City 1600 Attention: Evangelina S. Giorgetti Member Madame : This refers to your letter dated 6 February 2012 requesting on behalf of Changeneers Digital Corporation for tax exemption pursuant to Section 30 of the Tax Code of the Philippines, as amended. It is represented that Changeneers Digital Corporation with Taxpayer's Identification No. 008-004-135 , is a non-stock, non-profit corporation duly organized under the laws of the Philippines; that it is registered with the Securities and Exchange Commission (SEC) under Registration No. CN201104141 ; and that the purposes for which it was incorporated are the following: "To provide news and information support to the most widely-used or accessed government agencies with the goal of improving efficiency in the service delivery by the agency, for the Filipino citizen and long term provide through technology a digitally-accessed portal to avail of the same services." In reply, please be informed that Section 30 of the National Internal Revenue Code of 1997, as amended, enumerates the organizations exempt from taxation, to wit: "SEC. 30. Exemptions from Tax on Corporations . The following organizations shall not be taxed under this Title in respect to income received by them as such: aDcETC (A) Labor, agricultural or horticultural organization not organized principally for profit; (B) Mutual savings bank not having a capital stock represented by shares, and cooperative bank without capital stock organized and operated for mutual purposes and without profit; (C) A beneficiary society, order or association, operating for the exclusive benefit of the members such as a fraternal organization operating under the lodge system, or a mutual aid association or a nonstock corporation organized by employees providing for the payment of life, sickness, accident, or other benefits exclusively to the members of such society, order, or association, or nonstock corporation or their dependents; (D) Cemetery company owned and operated exclusively for the benefit of its members; (E) Nonstock corporation or association organized and operated exclusively for religious, charitable, scientific, athletic, or cultural purposes, or for the rehabilitation of veterans, no part of its net income or asset shall belong to or inure to the benefit of any member, organizer, officer or any specific person; (F) Business league, chamber of commerce, or board of trade, not organized for profit and no part of the net income of which inures to the benefit of any private stockholder or individual; (G) Civic league or organization not organized for profit but operated exclusively for the promotion of social welfare; (H) A nonstock and nonprofit educational institution; (I) Government educational institution; (J) Farmer's or other mutual typhoon or fire insurance company, mutual ditch or irrigation company, mutual or cooperative telephone company, or like 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; and ADScCE (K) Farmers', fruit growers', or like association organized and operated as a sales agent for the purpose of marketing the products of its members and turning back to them the proceeds of sales, less the necessary selling expenses on the basis of the quantity of produce finished by them; Notwithstanding the provisions in the preceding paragraphs, the income of whatever kind and character of the foregoing organizations from any of their properties, real or personal, or from any of their activities conducted for profit regardless of the disposition made of such income, shall be subject to tax imposed under this Code." In relation to Section 30 of the National Internal Revenue Code of 1997, as amended, Section 1 of Revenue Regulations 13-98 defines a non-stock, non-profit organization as a corporation referred to under Section 30 (E) and (G) of the Tax Code created or organized under Philippine laws exclusively for one or more of the following purposes: "(i) religious; (ii) charitable; (iii) scientific; (iv) athletic; (v) cultural; (vi) rehabilitation of veterans; and (vii) social welfare." It is a well settled principle in taxation that exemption from taxation are highly disfavored in law, and he who claims an exemption must be able to justify his claim by the clearest grant of organic or statute law. An exemption from the common burden cannot be permitted to exist upon vague implications ( Asiatic Petroleum Co. [P.I.], Ltd. versus Llanes [49 Phil. 466] ). A reading of the above cited law and jurisprudence would establish that Changeneers Digital Corporation is not one of the exempt corporations enumerated under Section 30 of the Tax Code of 1997, as amended, for it to qualify as a tax exempt entity. IADaSE In view hereof, your request for the issuance of a certificate of tax exemption is denied for lack of legal basis. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue