BIR Ruling No. 139-11

April 29, 2011 BIR RULING NO. 139-11 Section 30 (E) of the Tax Code of 1997; BIR Ruling No. DA-457-99; BIR Ruling No. [NSNP-(S30E-158) 806-09]; BIR Ruling No. S-30-027-2006 God's Heart Mission Christian Community Church, Incorporated Sitio Mapacla, Barangay Special District Jalajala, Rizal Attention: Mr. Kim Won Sup President/Chairman Gentlemen : This refers to your letter dated January 27, 2011 requesting for the issuance of a certificate of tax exemption enjoyed by non-stock corporation or association organized and operated exclusively for religious purposes under Section 30 (E) of the Tax Code of 1997, as amended. AScHCD It is represented that God's Heart Mission Christian Community Church Incorporated is a religious corporation duly established and existing under Philippine laws, registered with the Securities and Exchange Commission (SEC) under Company Registration No. CN201006607 dated April 29, 2010 with Taxpayer's Identification No. 007-747-869. As a religious corporation, it is God's Heart Mission Christian Community Church Incorporated's purpose to administer its affairs, properties and temporalities. In reply, please be informed that this Office cannot as yet issue the requested ruling/certificate of tax exemption because God's Heart Mission Christian Community Church Incorporated has to prove by actual operation for at least three (3) years that it is really a corporation/association exempt from income tax under Section 30 (E) of the Tax Code of 1997, as amended. (BIR Ruling No. [NSNP-(S30E-158) 806-09] dated December 22, 2009) God's Heart Mission Christian Community Church Incorporated can file the necessary annual information return instead of an income tax return on or before the 15th day of the fourth month following the end of its taxable year as required under Section 24 of Revenue Regulations No. 2-40 dated February 10, 1940 (Collector vs. Sinco, G.R. L-9276 dated October 23, 1956) . Based on such information return, we shall conduct the necessary investigation on the activities undertaken during the period. The letter of exemption shall thereafter be issued depending upon the result of our investigation. However, God's Heart Mission Christian Community Church Incorporated shall be subject to the corresponding internal revenue taxes imposed under the Tax Code of 1997, as amended, on income derived from any of its properties, real or personal, or activity conducted for profit regardless of the disposition thereof, which income should be returned for taxation. Likewise, interest income from currency bank deposits and yield or any other monetary benefit from deposit instruments and from trust funds and similar arrangements, and royalties derived from sources within the Philippines are subject to 20% final withholding tax; provided, however, that the interest income it derives from a depository bank under the expanded foreign currency deposit system shall be subject to a final withholding tax of 7 1/2% pursuant to Section 27 (D) (1) in relation to Section 57 (A) of the Tax Code of 1997, as amended. Moreover, as a non-stock and non-profit exempt entity, God's Heart Mission Christian Community Church Incorporated is required to file on or before the 15th day of the fourth month following the end of the cooperative's accounting period a Profit and Loss Statement and Balance Sheet with 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. aTEHIC It should be understood that God's Heart Mission Christian Community Church Incorporated shall be constituted as a withholding agent for the government if it acts as an employer and any of its employees receives compensation income subject to withholding tax, or if it makes payments to individuals or corporations subject to the withholding tax provided for in Section 57 of the Tax Code of 1997, as amended. Finally, God's Heart Mission Christian Community Church Incorporated books of accounts and other pertinent records shall be subject to periodic examination by revenue enforcement officers of this Bureau for the purpose of ascertaining whether it has complied the conditions under which it may be granted tax exemption or tax incentives and/or has paid its tax liability, if any, pursuant to Section 235 of the Tax Code of 1997, as amended. For purposes of securing a permanent exemption after the three (3)-year period, you are required to submit the following documents pursuant to Revenue Memorandum Circular (RMC) No. 14-2001; 1) SEC Registration; 2) Articles of Incorporation which must include the following provisions: a) That the corporation is non-stock, non-profit; b) That the primary purpose for which it was created is one of those enumerated under Sec. 30 of the Tax Code of 1997; c) That no part of the net income shall inure to the benefit of any its members; d) That the trustees do not receive any compensation; and e) In case of dissolution, assets of the corporation shall be transferred to similar institution or to the government. 3) Annual Information Returns and Audited Financial Statements covering the past three (3) years. This ruling is being issued on the basis of the foregoing facts as presented. However, if upon investigation it will be ascertained that the facts are different, then this ruling shall be considered as null and void. cHaCAS Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue