GTL Indangan Neighborhood Association, Inc.

January 27, 2009 BIR RULING [NSNP-(S30C-002) 059-09] 30 (C);S-30-020-2004 GTL Indangan Neighborhood Association, Inc. Ipil-Ipil Street, Zone 10, Phase 4 DDF Village, Mandug, Davao City Attention: Ms. Anita P. Lisondra President Gentlemen : This refers to your letter dated July 13, 2006 requesting for exemption from the payment of income tax and the filing of the corresponding income tax return under Section 30 of the Tax Code of 1997, as amended. CaEIST Documentary evidence submitted to this Office disclosed that GTL Indangan Neighborhood Association, Inc. is a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission on July 04, 2006 under SEC Registration No. CN200628195; and that the main objectives for which the corporation was formed is to initiate a healthy and harmonious neighborhood by developing the civic, spiritual and social cultural awareness and consciousness of its members. Based on the foregoing, this Office is of the opinion and so holds that GTL Indangan Neighborhood Association, Inc. is a corporation organized for the exclusive benefit of the members as contemplated under Section 30 (C) of the Tax Code of 1997, 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 an income tax return concerning such income. However, it is subject to the corresponding internal revenue taxes imposed under the Tax Code of 1997, as amended, 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 by 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, as amended. Moreover, it is required to file on or before the 15th day of the fourth month following the end of the accounting period a Profit and Loss Statement and Balance Sheet with the Annual Information Return under oath, stating its gross income and expenses incurred during the preceding period 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 sources and disposition of income. It is requested that a copy of this letter of exemption be attached to the Annual Information Return which your corporation will file on or before the 15th day of the fourth month of each year. Under Section 235 of the Tax Code of 1997, as amended, any provision of existing general and special law to the contrary notwithstanding, the books of accounts and other pertinent records of tax-exempt organization or grantees of tax incentives shall be subject to examination by the BIR for purposes of ascertaining compliance with the conditions under which they have been granted tax exemptions or tax incentives, and their tax liabilities, if any. It should be understood that GTL Indangan Neighborhood Association, Inc. shall be constituted as a withholding agent for the government if it acts as an employer and any of its employee receives compensation income subject to withholding tax under Sec. 79 (A), Chapter XIII, Title II of the Tax of 1997, as amended, and as implemented by Revenue Regulations No. 2-98, as amended, or if it makes income payments to individuals or corporations subject to the withholding tax provided for in Section 57 of the same Code, also as implemented by Revenue Regulations No. 2-98, as amended. 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 considered null and void. DHITcS Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service