Tax Exemption Granted to Holy Family Academy of Angeles, Pampanga, Inc.

October 21, 1988 BIR RULING NO. 515-88 24 176-88 515-88 Gentlemen : This refers to your letters dated January 11 and February 10, 1988 requesting a certificate of tax exemption in your favor pursuant to Sec. 4(3), Article XIV of the 1987 Constitution on the following: 1. interest income from bank deposits and/or substitute instruments; and, 2. customs duties and value-added tax on importation of books and other educational materials and equipment. In reply, I have the honor to inform you that paragraph 3, Section 4, Article XIV of the 1987 Constitution provides, viz: "(3) All revenues and assets of non-stock, non-profit educational institution used actually, directly and exclusively for educational purposes shall be exempt from taxes and duties. . . ." The aforementioned Constitution was ratified at a plebiscite held for the purpose on February 2, 1987. Accordingly, the tax exemption privileges of non-stock, non-profit educational institutions took effect as of said date. Non-stock, non-profit educational institutions are exempt from tax on all revenues derived in pursuance of its purpose as an educational institution and used actually, directly and exclusively for educational purposes. The exemption herein contemplated refers to internal revenue taxes and customs duties, in appropriate cases, imposed by the national government on all revenues and assets exclusively for educational purposes . They shall however, be subject to internal revenue taxes on income from trade, business or other activity the conduct of which is not related to the exercise or performance by such educational institution of its educational purposes or function. (Sec. 2, Finance Department Order No. 137-87). Such being the case, the Holy Family Academy of Angeles, Pampanga, Inc. being a non-stock, non-profit educational institution is exempt from taxes e.g. 10% tax on its income as educational institution consisting of tuition, matriculation and other similar fees; 20% withholding tax on its interest income and/or yield on deposit substitute instruments and interest on its savings and time deposits; customs duties and value-added tax on its importation of books and other educational materials and equipment to be actually, directly and exclusively used for educational purposes. cdta Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner