Caliraya Resort Club Inc.

December 22, 2009 BIR RULING [NSNP-(S30E-159) 810-09] 30 (E); S30-002-2004; S30-039-2005; DA-043-04; S30-027-03 Caliraya Resort Club Inc. Brgy. Lewin Lumban, Laguna Attention: Atty. Rolando P. Domingo Accounting Head Gentlemen : This refers to your letter dated December 19, 2009 requesting for exemption from the payment of income tax under Section 30 of the Tax Code of 1997. Documents submitted to this Office show that Caliraya Resort Club, Inc. (CRCI) is a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CS200904554 dated December 17, 2009; and that the main objective for which the corporation was formed is to foster, conduct and promote the social, fraternal, business, athletic, and Christian activities among its members, with the main objective of undertaking the planning, construction, development, maintenance, management and operation of club houses and other indoor and outdoor sports, and physical fitness facilities, restaurants, dining halls, worship areas, prayer rooms, conference centers and similar facilities. Based on the foregoing, this Office is of the opinion and so holds that CRCI is a corporation organized for recreational, sports and athletic activities as contemplated under Section 30 (E) of the Tax Code of 1997, as amended. 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. 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, as amended. ATCaDE Moreover, CRCI 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 CRCI will file on or before the 15th day of the fourth month of each year. Under Section 235 of the Tax Code of 1997, as amended, any provision of existing general and special law to the contrary notwithstanding, the books of accounts and other pertinent records of tax-exempt organizations or grantees of tax incentives shall be subject to examination by the BIR for purposes of ascertaining compliance with the conditions under which they have been granted tax exemptions or tax incentives, and their tax liabilities, if any (RMC No. 89-78 dated October 30, 1973 publishing the amendment effected by P.D. No. 1457 to then Section 324 now Section 235 in relation to Section 232 of the Tax Code, as amended). It should be understood that CRCI 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 amended, and 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 same Code, also as implemented by Rev. Regs. No. 2-98, as amended. Finally, CRCI is subject to the payment of the annual registration fee of PhP500.00 as prescribed in Section 236 (B) of the Tax Code of 1997, as amended. It is also required under Section 6 (C) in relation to Section 237 of the same Code to issue duly registered receipts or sales or commercial invoices for each sale or transfer of merchandise or for services rendered which are not directly related to the activities for which CRCI is registered [Revenue Memorandum Circular (RMC) No. 76-2003]. 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 as null and void. IASEca Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service