Volunteer Initiative for Peace Environment, Resources and Society (VIPERS), Inc.

March 16, 2010 BIR RULING [NSNP-(S30E-003) 009-10] Section 30; BIR Ruling Nos. DA-252-99 & S-30-095-99 Volunteer Initiative for Peace Environment, Resources and Society (VIPERS), Inc. Brgy. San Gregorio Alaminos, Laguna Attention: Mr. Marcelo G. Baraero President Gentlemen : This refers to your letter, indorsed to this Office by Revenue Region No. 9, San Pablo City, for tax exemption. Documentary evidence submitted disclosed that Volunteer Initiative for Peace Environment, Resources and Society (VIPERS), Inc. is a non-stock, non-profit charitable corporation registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CN200612913 dated August 14, 2006. The purposes for which it was organized are as follows: "To uplift the community's economic, social, and educational status by extending financial help; To foster volunteer programs which will benefit not only the community it serves but neighboring communities as well; To promote peace and order in the community in coordination with the proper gov't. authorities; To develop and harness the people's participation in every economic activity toward the development of the community through self-help and self-reliance." AaIDHS In reply, please be informed that this Office cannot as yet issue the requested ruling/certificate of tax exemption because VIPERS has to prove by actual operation for at least three (3) years that it is really an organization/association exempt from income tax under Section 30 of the Tax Code of 1997, as amended. It can file the necessary annual information return instead of an income tax return on or before the 15th day of the fourth month of the preceding accounting period following the start of its operation as an exempt organization as required under Section 24 of Revenue Regulations (Rev. Regs.) No. 2 ( Collector vs. Sinco, G.R. L-9276 dated October 23, 1956). Based on such information return, we shall conduct the necessary investigation on the activities undertaken during the period. The letter of exemption shall thereafter be issued depending upon the result of our investigation. However, VIPERS 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, the interest income from currency bank deposits and yield or any other monetary benefits 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 close 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 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 VIPERS shall be constituted as a withholding agent of the government if it acts as an employer and its employees receive compensation income subject to withholding tax under Section 79 (A), Chapter XIII, Title II of the Tax Code of 1997, as implemented by Rev. Regs. 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 Tax Code of 1997, as amended, and as implemented by Rev. Regs. No. 2-98, as amended. Finally, the corporation's books of accounts and other pertinent records shall be subject to examination by the Bureau of Internal Revenue for the purpose of ascertaining whether it is complying with the conditions under which it has been granted tax exemption and its tax liability, if any. For purposes of securing a permanent exemption after the three (3)-year period, VIPERS is required to submit the following documents pursuant to Revenue Memorandum Circular No. 14-2001: 1) SEC Registration; 2) Articles of Incorporation which must include the following provisions: ScAHTI i) that the corporation is non-stock, non-profit; ii) that the primary purpose for which it was created is one of those enumerated under Section 30 of the Tax Code of 1997, as amended; iii) that no part of the net income shall inure to the benefit of any of its members; iv) that the trustees do not receive any compensation; and v) in case of dissolution, assets of the corporation shall be transferred to similar institution or to the government; 3) By-laws; 4) Annual Information Returns for the past three (3) years; and 5) Financial Statements (balance sheet) for the past three (3) years. 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. SHADcT Very truly yours, Commissioner of Internal Revenue By: (SGD.) GREGORIO V. CABANTAC Deputy Commissioner Legal and Inspection Group