Church of the Great I Am and Ministries, Inc. (GIABC, Inc.)

February 19, 2009 BIR RULING [NSNP-(S30E-012) 117-09] Sec. 30 (E) Church of the Great I Am and Ministries, Inc. (GIABC, Inc.) Upper Sagadan, Baroy, Lanao del Norte Attention: Rev. Pancracio V. Pontillas Church Pastor Gentlemen : This refers to your undated letter received by the law division on August 24, 2007 requesting for exemption from income tax under Section 30 of the Tax Code of 1997. Documentary evidences submitted disclose that Church of the Great I Am and Ministries, Inc. (GIABC, Inc.) is a non-stock, non-profit religious organization registered with the Securities and Exchange Commission (SEC) with SEC Registration No. CN200525454 dated January 31, 2005; that the purpose for which it was organized was to glorify God and to do His will by building up God's kingdom, and to spread the gospel of the Lord Jesus Christ; that the officers and members of the board of trustees do not receive any remuneration or fixed compensation from GIABC, Inc.;that their source of income is solely from donations given by local benefactors and which are used purposely to answer for the personal services, support services, program activities, consultancy services and necessary operating expenses; and that in the event of its dissolution the remaining properties or asset of the organization shall be donated to the partner's members organization and network of the GIABC, Inc. who has the same line of function/purpose. In reply, please be informed that this Office cannot as yet issue the requested ruling/certificate of tax exemption because GIABC, Inc. has yet 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. GIABC, 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 (Rev. Regs.) No. 2 (Collector vs. Sinco, G.R. No. 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. DIETHS However, GIABC, Inc. is subject to the corresponding internal revenue taxes imposed under the Tax Code of 1997 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, as amended. Moreover, it is 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 the Annual Information Return under oath, stating its gross income and expenses incurred during the preceding period 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 GIABC, Inc. shall be constituted as withholding agent for the government if it acts as an employer and its employees receive 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 Regulation 2-98, or if it makes income payments to individuals or corporations subject to the withholding tax pursuant to Section 57 of the Tax Code of 1997, also as implemented by Revenue Regulation 2-98 (BIR Ruling No. S-30-008-2003 dated April 2, 2003). Furthermore, under Section 235 of the Tax Code of 1997, the books of accounts and other pertinent records of GIABC, Inc. shall be subject to examination by the BIR for purposes of ascertaining compliance with the conditions under which it has been granted tax exemption or tax incentives, and its tax liabilities, if any. Finally, for purposes of securing a permanent exemption after the three (3)-year period, GIABC, Inc. is required to submit the following documents pursuant to Revenue Memorandum Circular No. 14-2001: STaCcA 1) SEC Registration 2) Amended Articles of Incorporation which must include the following provisions: a. That the corporation is non-stock, non-profit; b. That the primary purpose for which it was created is one of those enumerated under Section 30 of the Tax Code of 1997; c. That no part of the net income shall inure to the benefit of any of its members; d. That the trustees do not receive any compensation; e. 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 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 ascertained that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service