Tuburan Sa Paglaum, Inc.

June 1, 2010 BIR RULING [NSNP-(S30E-009) 031-10] Sec. 30; BIR Ruling No. DA-471-98; BIR Ruling No. S-30-008-03; BIR Ruling No. S-30-100-00 Tuburan Sa Paglaum, Inc. Blessed Sacrament Parish North Reclamation Area Cebu City Attention: Sr. Bridget Anne Healy, SSHJM Gentlemen : This refers to your letter dated April 25, 2008, which was referred to this Office by Revenue Region No. 13, Cebu City, by way of Ist Indorsement dated September 24, 2008, requesting a ruling that TUBURAN SA PAGLAUM, INC. is exempt from the payment of income tax and the filing of the corresponding income tax return pursuant to Section 30 of the Tax Code of 1997. IEHDAT Documentary evidence submitted to this Office disclosed that the TUBURAN SA PAGLAUM, INC. with TIN 260-169-707 is a non-stock non-profit corporation duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. 25522 dated March 8, 2007; and that the primary purpose for which it is "To facilitate every individual in the community to be committed in the total transformation of his/her attitudes and structures of society through the light of the gospel." 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 TUBURAN SA PAGLAUM, 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. TUBURAN SA PAGLAUM, 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 the * 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, TUBURAN SA PAGLAUM, 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. cIaCTS Finally, TUBURAN SA PAGLAUM, 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. For purposes of securing a permanent exemption after the three (3)-year period, you are required to submit the following documents pursuant to Revenue Memorandum Circular No. 14-2001, to wit: 1. SEC Registration; 2. Articles of Incorporation which must include the following provisions: i. that the corporation is non-stock, non-profit; ii. that the primary purpose for which it was created is one of those enumerated in Section 30 of the Tax Code of 1997; 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. AaCTID Very truly yours, (SGD.) MARISSA O. CABREROS OIC-Assistant Commissioner Legal Service