LCB Performing Arts Center Foundation, Inc.

May 20, 2009 BIR RULING [NSNP-(S30E-058) 331-09] 30 (E);S30-047-01 LCB Performing Arts Center Foundation, Inc. 857 Gov. Sobrecarey Street Davao City Attention: Ms. Lu Chin Bon President Gentlemen : This refers to your letter dated November 7, 2008 requesting for Certificate of Exemption from the payment of income tax. It is represented that the LCB PERFORMING ARTS CENTER FOUNDATION, INC.,with TIN No. 005-987-412-000, is a non-stock, non-profit domestic corporation duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. D200100932; and that the purposes for which the Corporation is incorporated are the following: "1. To promote performing arts in Davao City; 2. To discover, train and develop Davao-based artists in the fields of dance, music, and drama; 3. To provide Davao City with a sustained program of artistic performances to raise the public's level of cultural consciousness; 4. To develop an audience for various types of artistic performances; 5. To showcase Davao's talents in other communities; 6. To be a venue for any artist who wants to join and share talents and leave a legacy to the next generation; 7. To acquire and dispose of absolutely or conditionally, by purchase, sale, exchange, mortgage, lease or otherwise personal, real or any interest therein which may be necessary; IHTASa 8. To accept and receive contributions, donations and/or endorsement from local, national or foreign individuals, corporation, government institution by deeds, grants, devices, bequests or gifts; 9. To administer gifts and bequests which may be accepted and received as endorsements for the promotion of the aims of the corporation manage and use the same according to the purposes and in the manner specified by the donors; 10. To perform all and every thing necessary and praying for the attainment of the purposes or the furtherance of any of the corporate powers above set forth." In reply, pleased be informed as follows: Based on the foregoing, this Office is of the opinion and so holds that LCB PERFORMING ARTS CENTER FOUNDATION, INC. is a corporation not organized for profit but operated exclusively for cultural purposes as contemplated under Section 30 (E) of the Tax Code of 1997. Accordingly, it is exempt from the payment of income tax on income received by it as such organization, and therefore, need not file an income tax return concerning such income. HIEASa 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, 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 is requested that a copy of this letter of exemption be attached to the annual information return which LCB PERFORMING ARTS CENTER FOUNDATION, INC. will file on or before the 15th day of the fourth month of each year. Under Section 235 of the Tax Code of 1997, any provision of existing general and special law to the contrary notwithstanding, the books of accounts and other pertinent records of tax-exempt organization or grantees of tax incentives shall be subject to examination by the BIR for purposes of ascertaining compliance with the conditions under which it has been granted tax exemptions or tax incentives, and its tax liabilities, if any. It should be understood that the said exempt non-government organization shall be constituted as withholding agent of 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 Regulations (Rev. Regs.) 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 Rev. Regs. No. 2-98, as amended (BIR Ruling No. S30-047-01 dated June 5, 2001). This ruling is being issued on the basis of the foregoing facts as presented. However, if upon investigation it will be disclosed that the facts are different, then this ruling shall be considered null and void. CAaDSI Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service