Lingkod Bayan AUV Operators and Drivers Association, Inc.

February 12, 2009 BIR RULING [NSNP-(S30E-006) 094-09] 30 (E); S-30-030-2003 Lingkod Bayan AUV Operators and Drivers Association, Inc. #20 Villaflor Village, Brgy. Gulod, Novaliches Quezon City Attention: Noel T. Martinez President Gentlemen : This refers to your letter dated August 11, 2008 requesting in effect 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. Documents submitted to this Office show that the Lingkod Bayan AUV Operators and Drivers Association, Inc. is a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CN200514241 dated August 19, 2005. The purposes for which it was organized are as follows: "1. To establish an organization that will represent the AUV operators that will represent the operators and drivers plying the route of Quezon City to any point of Luzon. 2. To develop cooperation, assistance, harmony and understanding, among the members to advance their economic and social status, as well as spiritual, cultural and moral well being. 3. To enhance and strive for the improvement of the occupation of the members. 4. To assist and coordinate with appropriate government agencies in the implementation of transportation laws and traffic rules and regulations. CDAEHS 5. To promote the enlightenment of all members, through seminars and training programs on the present traffic rules and regulations in regard to their rights and obligations, and other matters regarding the convenience and safety of the riding public. 6. To do and perform all other acts and deeds as may be necessary, convenient and appropriate for the accomplishment of the foregoing purposes." In reply, please be informed that this Office cannot as yet issue the requested ruling/certificate of tax exemption. You have to prove by actual operation for at least three (3) years that you are really an organization/association exempt from income tax under Section 30 of the Tax Code of 1997. You 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 year following the start of your 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 your activities undertaken during the period. The letter of exemption shall thereafter be issued depending upon the result of our investigation. However, Lingkod Bayan AUV Operators and Drivers Association, Inc., shall be subject to the corresponding internal revenue taxes imposed under the Tax Code of 1997 on 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 the interest income you derive from a depository bank under the expanded foreign currency deposit system shall be subject to a final withholding tax of 7 1/2% pursuant to Section 27 (D) (1) in relation to Section 57 (A) of the Tax Code of 1997. Moreover, you are 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 Annual Information Return under oath, stating your gross income and expenses incurred during the preceding period and a certificate showing that there has not been any change in your By-Laws, Articles of Incorporation, manner of operation and activities as well as sources and disposition of income. ESaITA It should be understood that Lingkod Bayan AUV Operators and Drivers Association, Inc. shall be constituted as a withholding agent for the government if it acts as an employer and any of its employees receives compensation income subject to withholding tax, 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. (BIR Ruling No. S-30-030-2003 dated November 28, 2003) Finally, 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 may be granted tax exemption or tax incentives and tax liability, if any, pursuant to Section 235 of the Tax Code of 1997. (BIR Ruling No. ECCP-23-2000 dated May 12, 2000) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation it will be ascertained that the facts are different, then this ruling shall be considered as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service