Automotive Association of the Philippines, Inc.

March 11, 2009 BIR RULING [NSNP-(S30C-008) 194-09] Section 30 (C);S30-056-2001 Automotive Association of the Philippines, Inc. 683 Aurora Boulevard 1112 Quezon City Attention: Mr. Augusto C. Lagman President Gentlemen : This refers to your letter dated April 7, 2008 requesting a ruling that you are a non-stock, non-profit corporation which is exempted from income tax under Section 30 (C) of the Tax Code of 1997. It appears that the Automotive Association of the Philippines, Inc. (formerly the Philippine Motor Association) is a non-government organization incorporated as a non-stock entity organized for the exclusive benefit of its members in order to provide various privileges and benefits to its members in connection with the use of their motor vehicle; that the purpose to which it was created are, among others, are as follows: 1. To promote and maintain an association of all persons who own or who are interested in self-propelled vehicles; 2. To cooperate in securing rational legislation for the advancement, promotion of the interests of users of motor vehicles, to protect owners and users thereof against unjust and unreasonable legislation, and to secure then enactment of proper ordinances and regulations governing the use of such vehicle. and that it is duly registered with the Securities and Exchange Commission under SEC Registration No. PW-1567 dated January 14, 2002. Based on the foregoing, this Office is of the opinion and so holds that the Automotive Association of the Philippines, Inc. (formerly the Philippine Motor Association) falls within the purview of an association as contemplated under Section 30 (C) 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. aSCHcA 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 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. 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 sources and disposition of income. It should be understood that the said exempt association 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 your books of accounts and other pertinent records shall be subject to periodic examination by revenue enforcement officers of this Bureau for the purpose of ascertaining whether you have been complying with the conditions under which you have been granted tax exemption or tax incentives and your 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, this ruling shall be considered null and void. IcTEaC Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service