Freedom Fellowship Ministry Philippines Overseer, Inc.

June 16, 2010 BIR RULING [NSNP-(S30E-011) 045-10] Section 30; S30-027-2006 Freedom Fellowship Ministry Philippines Overseer, Inc. Jose Abad Santos Kidapawan City Attention: Mr. Thomas J. Luisi Overseer Gentlemen : This refers to your letter dated March 25, 2010, which was referred to this Office by Revenue District Office No. 108, Kidapawan City, by way of Memorandum dated April 6, 2010, 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. TAEcSC Documentary evidence submitted to this Office disclosed that the FREEDOM FELLOWSHIP MINISTRY PHILIPPINES OVERSEER, INC. is a corporation sole duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CN201002082 dated February 17, 2010 with TIN 007-609-752-000; and that no part of the income which the corporation may obtain is 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 FREEDOM FELLOWSHIP MINISTRY PHILIPPINES OVERSEER, INC. has to prove by actual operation or 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. FREEDOM FELLOWSHIP MINISTRY PHILIPPINES OVERSEER, 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 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. aCSHDI Moreover, FREEDOM FELLOWSHIP MINISTRY PHILIPPINES OVERSEER, 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, FREEDOM FELLOWSHIP MINISTRY PHILIPPINES OVERSEER, 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 (RMC) 14-2001: 1. SEC Registration; 2. Amended Articles of Incorporation which must include the following provisions pursuant to Section 30 (E) of the Tax Code; a. That no part of the net income shall inure to the benefit of any of its members; b. That the trustees do not receive any compensation; and c. In case of dissolution, the 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 covering the latest 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. DAcSIC Very truly yours, (SGD.) MARISSA O. CABREROS OIC-Assistant Commissioner Legal Service