Religious Corporations or Organizations are Not Accorded "More Preferential Treatment"

August 21, 1959 BIR RULING NO. 438-59 The Honorable The Secretary of Foreign Affairs M a n i l a S i r : With reference to your letter dated July 29, 1959, I have the honor to inform you that religious corporations or organizations are not accorded "more preferential treatment" than other non-profit corporations or organizations with regard to the payment of income tax. This is borne out by the provisions of section 27 of the National Internal Revenue Code which we quote: "SEC. 27. Exemption from tax on corporations . The following organizations shall not be taxed under this Title in respect to income received by them as such (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 profits; (c) Fraternal beneficiary society, order or association, operating under the lodge system or for the exclusive benefit of the members of a fraternity itself operating under the lodge system and providing for the payment of life, sick, accident, or other benefits to the members of such society, order, or association, or their dependents; (d) Cemetery company owned and operated exclusively for the benefit of its members; (e) Corporation or association organized and operated exclusively for the religious, charitable, scientific, athletic, cultural, or educational purposes, or for the rehabilitation of veterans no part of the net income of which inures to the benefit of any private stockholder or individual: Provided however , That the income of whatever kind and character from any of its properties, real or personal, or from any activity conducted for profit, regardless of the disposition made of such income, shall be liable to the tax imposed under this Code; (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 of the promotion of social welfare; (h) Club organized and operated exclusively for pleasure, recreation, and other non-profitable purposes, no part of the net income of which inures to the benefit of any private stockholder or member; (i) Farmers or other mutual typhoon or fire insurance company, mutual ditch or irrigation 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; (j) Farmer's fruit growers', or like association organized and operated as 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 furnished by them; (k) Corporation or association organized for the exclusive purpose of holding title to property, collecting income therefrom, and turning over the entire amount thereof, less expenses, and turning over the entire amount thereof, less expenses, to an organization which itself is exempt from the tax imposed by this Title. (As amended by section 5, Republic Act No. 82.)" It will be observed in the above-cited provisions that the organizations mentioned therein operate on a non-profit basis and are exempt from taxation only on incomes from their respective activities which incomes are devoted and used for the purpose or purposes for which they have been created. Under Republic Act No. 1916, religious organizations as well as international civic organizations, and charitable institutions are exempt from tax on donations received by them from abroad. Under section 261 of the National Internal Revenue Code, charitable institutions are granted exemption from the amusement tax to the extent of 50% thereof. Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue