BIR Ruling No. 485-12

July 30, 2012 BIR RULING NO. 485-12 Section 30 (E) 1997 Tax Code; BIR Ruling No. 115-2011 Servants of the Holy Spirit, Inc. Convent of the Holy Spirit 1166 Quezon City C.P.O. Box 2669 Attention: Sr. Carmelita Victoria, SSpS Gentlemen : This refers to your letter dated September 14, 2007 received by this Office on June 1, 2012 requesting on behalf of the Sister Servants of the Holy Spirit, Inc. exemption from the payment of capital gains tax (CGT) and documentary stamp tax (DST) on its sale of a parcel of land. TAEcCS It is represented that Sister Servants of the Holy Spirit, Inc. is a religious corporation organized and existing under the laws of the Philippines; that it is duly registered with the Securities and Exchange Commission (SEC) bearing SEC Registration No. P.W. 570 dated October 30, 1998; and that it is the registered owner of a parcel of land with an area of three hundred ninety two (392) square meters, covered by Transfer Certificate of Title (TCT) No. RT-94456 (315402) of the Registry of Deeds for Quezon City, located at 18 P. Pelayo St., BF Homes, Brgy. Holy Spirit, Quezon City. In reply, please be informed that a non-stock, non-profit religious organization is exempt from the payment of income tax on its income received as such organization. Section 30 (E) of the 1997 Tax Code, as amended, reads: "Sec. 30. Exemptions from Tax on Corporations . The following organizations shall not be taxed under this Title in respect to income received by them as such: xxx xxx xxx (E) Nonstock corporation or association organized and operated exclusively for religious , charitable, scientific, athletic, or cultural purposes, or for the rehabilitation of veterans, no part of its net income or asset shall belong to or inure to the benefit of any member, organizer, officer or any specific person; . . ." Under the above-quoted provision, a non-stock corporation or association organized and operated exclusively for religious, charitable, scientific, athletic, or cultural purposes, or for the rehabilitation of veterans, no part of its net income or asset shall belong to or inure to the benefit of any member, organizer, officer or any specific person is exempt from income taxation. ( BIR Ruling No. 115-2011 dated April 12, 2011 ) However, please take note of the last paragraph of Section 30 of the 1997 Tax Code, as amended, which provides, viz. : "Sec. 30. Exempt from Tax on Corporations . . . . xxx xxx xxx "Notwithstanding the provisions in the preceding paragraphs, the income of whatever kind and character of the foregoing organizations from any of their properties, real or personal, or from any of their activities conducted for profit regardless of the disposition made of such income, shall be subject to tax imposed under this Code. " IDEScC It is clear from the foregoing provision that a religious organization is subject to the corresponding internal revenue taxes imposed under the Tax Code of 1997 on its income derived from the sale of real property, which income should be returned for taxation. ( BIR Ruling No. 115-2011 dated April 12, 2011 ) Thus, your request that the sale by Sister Servants of the Holy Spirit, Inc. of its real property be exempt from the payment of CGT and DST is hereby denied for lack of legal basis. Please be guided accordingly. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue