BIR Ruling No. 192-11

June 24, 2011 BIR RULING NO. 192-11 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 End-Time Christian Assembly, Inc. Km. 1213 National Highway, Brgy. Mabini Cabadbaran City, Agusan Del Norte Attention: Alberto G. Cong Corporate Secretary/Treasurer Gentlemen : This refers to your letter dated May 14, 2010, requesting on behalf of END-TIME CHRISTIAN ASSEMBLY, INC. for the issuance of a Certificate of Tax Exemption enjoyed by a non-stock corporation or association organized and operated exclusively for religious purposes under Section 30 (E) of the Tax Code of 1997, as amended. It is represented that END-TIME CHRISTIAN ASSEMBLY, INC. with Tax Identification Number (TIN) 293-106-917-000, is a non-denominational and independent religious organization duly organized under the laws of the Philippines, registered with the Securities and Exchange Commission (SEC) under Registration No. CN200929421 dated July 7, 2009 and that the purposes for which it was incorporated are to organize a religious corporation and operate exclusively for religious purposes and for the administration of its affairs, properties and temporalities. In support of its request, END-TIME CHRISTIAN ASSEMBLY, INC. has completely submitted on April 25, 2011 the following documents: 1) Letter application for tax exemption; 2) Certified true copy of the SEC Certificate of Registration; 3) Certified true copy of the Amended Articles of Incorporation which includes the following provisions: a) That the corporation is a religious organization; b) That the primary purpose for which it was created is one of those enumerated under Sec. 30 (E) of the Tax Code of 1997, as amended; 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) That in case of dissolution, assets of the corporation shall be transferred to similar institution or to the government. 4) Certified true copy of the By-Laws; CDScaT 5) Certified true copy of 2011 General Information Sheet; 6) Certified true copies of 2010 Annual Income Tax Return and Financial Statement for the year end December 31, 2010; 7) BIR Certificate of Registration; and 8) Verification and Certification of Non-Forum Shopping. In reply, please be informed that this Office cannot as yet issue the requested ruling/certificate of tax exemption because END-TIME CHRISTIAN ASSEMBLY, INC. 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) END-TIME CHRISTIAN ASSEMBLY, INC. 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, END-TIME CHRISTIAN ASSEMBLY, 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. 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, it is required to file on or before the 15th day of the fourth month following the end of the accounting period a Profit and 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. DA-457-99 dated August 11, 1999) It should be understood that END-TIME CHRISTIAN ASSEMBLY, INC. 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. S-30-027-2006 dated June 23, 2006) prcd 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. It is subject to the payment of the annual registration fee of PhP500.00 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]. Finally, for purposes of securing a permanent exemption after the three (3)-year period, END-TIME CHRISTIAN ASSEMBLY, INC. is required to submit the following documents pursuant to Revenue Memorandum Circular No. 14-2001: 1) Certified true copy of the Certificate of Registration with the SEC; 2) Certified true copy of the Articles of Incorporation which includes 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, as amended; 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) Certified true copy of the By-Laws; 4) Certified true copy of the Annual Information Returns and Financial Statements for the last three (3) years of operation; 5) Certification under oath that there has not been any change in the By-Laws, Articles of Incorporation, manner of activities as well as the sources and disposition of income; 6) BIR Certificate of Registration. 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. IcDHaT Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue