Puso Sa Puso Edukasyon, Inc.

April 13, 2010 BIR RULING [NSNP-(S30E-006) 015-10] Section 30; S30-027-2006 Puso Sa Puso Edukasyon, Inc. 11 Nicanor Reyes Street Xavierville Subdivision Loyola Heights Quezon City Attention: Mr. Artur Chrzanowski President Gentlemen : This refers to your undated letter which was referred to this Office by Revenue District Office No. 39, South Quezon City, by way of its 1st Indorsement dated November 25, 2009, requesting for exemption from the payment of income tax and filing of the corresponding income tax return under Section 30 of the Tax Code of 1997. ECTAHc Documentary evidence submitted to this Office disclosed that the PUSO SA PUSO EDUKASYON, INC. with TIN 007-272-353-000 is a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission under SEC Reg. No. CN200904847 dated March 27, 2009; that the primary purpose for which the corporation was created is to organize charity events and sponsor scholarship to deserving students; and that no part of the income which the corporation may obtain as an incident to its operation shall be distributed as dividends to its members, trustees or officers. In reply, please be informed that this Office cannot as yet issue the requested ruling/certificate of tax exemption because PUSO SA PUSO EDUKASYON, INC. 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. PUSO SA PUSO EDUKASYON, INC. 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 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 determination letter of exemption shall thereafter be issued depending upon the result of our investigation. It should be understood that as a non-stock, non-profit corporation, it shall be constituted as withholding agent of the government if it acts as an employer and its employee receives 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, as amended, or if it makes income payments to individuals or corporations subject to the expanded withholding tax provided for in Section 57 (B) of the Tax Code of 1997, also as implemented by Revenue Regulations No. 2-98, as amended. 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. Likewise, 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. Moreover, PUSO SA PUSO EDUKASYON, INC. is required to file on or before the 15th day of the fourth month following the close of its accounting period a Profit & Loss Statement and Balance Sheet with the Annual Information Return under oath, stating the gross income and expenses incurred during a given taxable year. Finally, PUSO SA PUSO EDUKASYON, INC.'s books of accounts and other pertinent records shall be subject to periodic examination by the Bureau for the purpose of ascertaining whether it has complied to the conditions under which it may be granted tax exemption or tax incentives and/or has paid its liability, if any, pursuant to Section 235 of the Tax Code of 1997, as amended. CaATDE Very truly yours, (SGD.) MARISSA O. CABREROS OIC-Assistant Commissioner Legal Service