Exemption of Duly Registered Partnerships under Section 27(e) of the Tax Code

July 23, 1980 BIR RULING NO. 104-80 Pacifica Cultural Dance Company 3900 Marigold, Sun Valley Paraaque, Metro Manila Attention: Mrs . Maria Rita Ocampo Manager Gentlemen : This refers to your request for exemption from the payment of income tax and the filing of the corresponding income tax return under Section 27(e) of the Tax Code of 1977, as amended. It is represented that you are a duly registered partnership the purposes for which are: (a) to promote and lift Filipino and Polynesian culture to an artistic level thru the presentation of songs and dances and other related activities; (b) to produce here and abroad, cultural shows in consonance with the promotion of Filipino and Polynesian culture; that the capital of the partnership shall commence with the amount of Ten Thousand Pesos (P10,000.00) Philippine Currency, as contributed equally by all the partners; and that the profits derived annually shall be distributed equally among all the partners. To qualify for exemption under Section 27(e) of the Tax Code, it is required that no part of the net income of the organization shall inure to the benefit of any private stockholder or individual. In the case of a partnership such as this Company, the profits are distributed among the partners, thereby inuring to the benefit of private individuals. Such being the case, the partnership cannot claim exemption from income tax under the aforesaid provision of the Tax Code. In view thereof, your request has to be, as it is hereby denied. Very truly yours, RUBEN B. ANCHETA Acting Commissioner