Casureco 1 Independent Union of Employees (CINDEUM)

August 24, 2009 BIR RULING [NSNP-(S30A-001) 514-09] Section 30 (A);NSNP(S30h-058)289-2008 Casureco 1 Independent Union of Employees (CINDEUM) Puro Batia, Libmanan, Camarines Sur Attention: Mr. Lopito R. Mendoza CINDEUM President Gentlemen : This refers to your letter dated November 6, 2008 which was received by this Office by way of 2nd Indorsement dated January 29, 2009 by Revenue Region No. 10, Legazpi City requesting exemption from taxes as a non-stock, non-profit organization pursuant to Section 30 of the Tax Code of 1997, as amended. Documentary evidence submitted disclosed that the CASURECO 1 INDEPENDENT UNION OF EMPLOYEES (CINDEUM) with TIN 006-832-828-000 is a non-stock, non-profit organization registered with the Department of Labor and Employment under DOLE Registration No. 10990-LC as the sole and exclusive bargaining representative of all rank and file employees of CASURECO 1; and that the purposes for which the union was organized, among others are as follows, viz. : a. To establish an organization that will unite all the rank-and-file employees of the Camarines Sur 1 Electric Cooperative, Inc. into one cohesive, strong and effective organization for collective representation with management in matter of hours of work, wages, fringe benefits, working conditions and other terms and conditions of employment; b. To promote the physical, intellectual, moral, social, political and economic well-being of all the members through its short and long term programs; EHSAaD c. To promote and uphold the individual and collective rights of all the members; d. To foster mutual understanding between union and company through a harmonious and progressive labor-management relations. Based on the foregoing, this Office is of the opinion and so holds that the CASURECO 1 INDEPENDENT UNION OF EMPLOYEES (CINDEUM) falls within the purview of a non-stock, non-profit labor organization as contemplated under Section 30 (A) of the Tax Code of 1997. Accordingly, it is exempt from the payment of income tax on income received by it as such organization, and therefore, need not file an income tax return. However, it is subject to the corresponding internal revenue taxes imposed under the National Internal Revenue Code of 1997 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. Likewise, interest income from currency bank deposits and yield or any other monetary benefit from deposit substitute instruments and from trust funds and similar arrangements, and royalties derived from sources within the Philippines are subject to the 20% final withholding tax; provided, however, that interest income derived from it from a depository bank under the expanded foreign currency deposit system shall be subject to 7 1/2% final withholding tax pursuant to Section 27 (D) (1) in relation to Section 57 (A),both of the Tax Code of 1997. 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 change in its By-Laws, Articles of Incorporation, manner of operation and activities as well as resources and disposition of income. It should be understood that the said exempt non-stock, non-profit organization shall be constituted as withholding agent for the government if it acts as an employer and its employees receive compensation income subject to the withholding tax under Section 79 (A), Chapter XIII, Title II of the Tax Code of 1997, as implemented by Revenue Regulations No. 2-98, or if it makes income payments to individuals or corporations subject to the withholding tax pursuant to Section 57 of the Tax Code of 1997, also as implemented by Revenue Regulations No. 2-98. It is of course understood that its books of accounts and other pertinent records shall be subject to periodic examination by revenue enforcement officers of this Bureau for the purposes of ascertaining whether it has been complying with the conditions under which it has been granted tax exemption or tax incentives and its tax liabilities, if any, pursuant to Section 235 of the Tax Code of 1997. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. AIcaDC Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service