Exemption Granted to the Congregation of the Most Holy Redeemer

August 16, 1988 BIR RULING NO. 393-88 26 (e) 000-00 393-88 Reverend Father : This refers to your letter dated March 21, 1988 requesting in behalf of the Congregation of the Most Holy Redeemer, exemption from the payment of withholding tax on the royalty received from the sale of English-Tagalog dictionary and a Tagalog-English dictionary which you compiled. It is represented that you are a member of the religious Congregation of the Most Holy Redeemer since 1930; that you were assigned to the Philippines in December 1936 to do missionary work in the Tagalog regions; that it was to help yourself and other Redemptorists to better learn Tagalog that you undertook the arduous work of compiling an English-Tagalog dictionary since no such book was available in 1936; and that since your work on the compilation of the two dictionaries were undertaken at the suggestion and expense of the Congregation of the Most Holy Redeemer of which you are a member, any royalty earned by you has always been turned over to your congregation since you, as a religious, does not have the right to possess or independently use such royalty. In reply, please be informed that pursuant to Section 26(e) of the Tax Code, as amended, an association organized and operated exclusively for religious purposes, no part of the net income of which inures to the benefit of any private stockholder or individual is exempt from the payment of income tax in respect to income received by them as such. Accordingly, the Congregation of the Most Holy Redeemer being an association organized and operated for religious purposes and the ultimate beneficiary of the aforesaid royalties is not subject to the tax imposed under Section 24(e)(1) of the Tax Code, as amended, and consequently from the withholding tax prescribed under Section 50(a) of the same Code. In order to avail of this privilege, however, all royalties must be paid directly to the Congregation of the Most Holy Redeemer and there must be no connection between said royalties and what you receive for your maintenance from the Congregation. cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner