Seacrest Maritime Foundation, Inc.

October 19, 2009 BIR RULING [NSNP-(S30E-136) 661-09] 30 (E) Seacrest Maritime Foundation, Inc. Barangay Calamba V. Rama Ave., Cebu City Attention: Mr. Andrew S. Aznar President Gentlemen : This refers to your letter dated September 11, 2008, received by this Office on November 20, 2008 via 1st Indorsement dated November 3, 2008 from Revenue Region No. 13, Cebu City, requesting tax exemption as a non-stock, non-profit corporation under the 1997 Tax Code, as amended. It is represented that Seacrest Maritime Foundation, Inc. is a non-stock, non-profit organization registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CN200729929 with SEC Certificate of Incorporation dated October 10, 2007; that the purposes for which it was incorporated are the following: 1. To organize and establish proactive and cohesive association to maintain and reach out deserving students to provide but not limited to educational assistance; 2. To serve its interest and by providing seminars, symposia, fora and other related activities; 3. To do other act or acts, incidental thereto, or in connection therewith or otherwise engage in or do such things connected with the growth and development of the association or conducive to the attainment of the above objects or any of them respectively. that the funds of the corporation primarily come from the contributions of the members of the Board of Trustees and donations; that no part or portion of the income or assets of the corporation inures to the benefit of any of its members; and that following documents were submitted in support of this request: 1) Certificate of SEC Registration; 2) Articles of Incorporation; 3) By-laws; and 4) Financial statement for 2008. DEICHc In reply, please be informed that based on the foregoing, this Office cannot as yet issue the requested certificate of tax exemption because Seacrest Maritime Foundation, 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 (E) of the Tax Code of 1997, as amended. Seacrest Maritime Foundation, 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. This letter of exemption shall thereafter be issued depending upon the result of our investigation. However, Seacrest Maritime Foundation, Inc. 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 should be understood that the said exempt 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). 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. SEC registration is not enough to accredit the corporation as a donee institution. One of the requirements of PCNC is a BIR ruling issued by this Office exempting Seacrest Maritime Foundation, Inc. from income tax. For further inquiries on the accreditation and certification process, please contact PCNC at 6/F SCC Building, CFA-MA Compound, 4427 Interior Old Sta. Mesa, 1016 Manila or call their offices at 715-9594, 715-2756, 782-1568 and 715-2783 (telefax).You may also visit their website: http://www.pcnc.com.ph or email them at [emailprotected]. aSTAHD Finally, for purposes of securing a permanent exemption after the three (3)-year period, Seacrest Maritime Foundation, Inc., is required to submit the following documents pursuant to Revenue Memorandum Circular No. 14-2001: 1) SEC Registration; 2) 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 issued on the basis of the foregoing representations. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service