Exemption of Habitat for Humanity Philippines Foundation, Inc. from the Payment of Income Tax and the Filing of the Corresponding ITR

November 4, 1988 BIR RULING NO. 526-88 26 (g) & 29 (h) (2) (c) (i) 000-00 526-88 Gentlemen : This refers to your request for exemption from the payment of income tax and the filing of the corresponding income tax return under Section 26 of the National Internal Revenue Code, as amended; and that donations/contributions made in your favor be fully deductible under Section 29(h)(2)(c)(i) of the same code. cdti Investigation conducted by this Office disclosed that the Habitat of Humanity Philippines Foundation, Inc. is a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission; that the purposes for which the corporation is formed are: to provide an institutional framework or entity for sponsoring specific projects in habitat development, including the rendering of assistance to, by way of collaborative efforts with, qualified and deserving persons in need of acquiring modest but adequate housing, all on a non-profit and interest-free bases; to associate and work in cooperation with other groups and agencies functioning with purposes kindred to those of the foundation, specifically: (1) In witnessing to the Gospel of Jesus Christ throughout the world by working in cooperation of God's people in need to create a better habitat in which to live and work; (2) In witnessing to the Gospel of Jesus Christ through loving acts and spoken and written word; and (3) In enabling an expanding number of persons from all walks of life to participate in this ministry; and to accept donations and contributions in money or in kind, and to receive and maintain as assets of the Foundation and property, real or personal, granted by gift, devise or bequest, or acquired by purchase or other onerous mode, from any person, firm, trust, association or corporation, and to hold, administer and dispose of the same in accordance with and pursuant to the provision of its Articles of Incorporation; that the Foundation has and shall have no capital stock, and no part of its net income shall inure to the benefit or profit of any private individual or entity, nor be distributable as dividend, compensation, or any other form of remuneration or pecuniary benefit to its trustee, officers, members, donor or contributors; that not more than thirty percent (30%) of the gross income of the Foundation shall be devoted to administrative expenses; and that upon dissolution of the Foundation, its net assets remaining, if any, shall be distributed to another Foundation or non-stock, non-profit corporation of the same or similar nature and objectives, or to the Government of the Republic of the Philippines, or any of its political subdivisions or public welfare agencies. Based on the foregoing, this Office is of the opinion and so holds that the Habitat for Humanity Philippines Foundation, Inc. falls within the purview of a non-profit organization operated exclusively for the promotion of social welfare as contemplated under Section 26(g) of the National Internal Revenue Code, as amended. Accordingly, it is exempt from the payment of income tax on income received by it as such organization, and therefore, need not file on income tax return concerning such income. However, it 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 . Moreover, it is required to file on or before April 15 of each year a profit and loss statement and balance sheet with the annual information return under oath, stating its gross income and expenses incurred during the year and a certificate showing that there has not been any charge in its By-Laws, Articles of Incorporation, manner of operation and activities as well as sources and disposition of income. As regards the deductibility of the donations or contributions, the same shall be allowed as deductions for income tax purposes to an amount not exceeding 6% in the case of an individual and 3% in the case of a corporation of the taxpayer's taxable income derived from business as computed without the benefit of this deductions, can be deductible in full provided that conditions are complied with as prescribed by Section 30(h)(2)(c) [now Section 29(h)(2)(c)] of the Tax Code, as amended by Batas Pambansa Blg. 45, and as implemented by BIR-NEDA Regulations No. 1-81. cdta It is requested that a copy of this letter of exemption be attached to the annual information return which you will file on or before April 15 of each year. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner