MICRA Philippines Foundations, Inc.

June 16, 2010 BIR RULING [NSNP-(S30G-006) 048-10] Sec. 30; S-30-102-2008 MICRA Philippines Foundations, Inc. Unit 603 Vicente Madrigal Building 6793 Ayala Avenue, Makati City Attention: Ernesto V. Gementera Executive Director Gentlemen : This refers to your letter dated June 03, 2009 requesting for exemption from the payment of income tax, filing of the corresponding income tax return under Section 30 of the Tax Code of 1997, as amended. DSATCI Documents submitted to this Office disclosed that MICRA Philippines Foundation, Inc. is a non-stock, non-profit corporation under Section 30 of the Tax Code of 1997, as amended; that it is duly registered with the Securities and Exchange Commission under SEC Registration No. CN200816874 dated November 17, 2008 with Taxpayer Identification Number (TIN) 007-161-773; and that primary purpose for which the corporation was formed is to build the institutional strength and outreach of the Philippine microfinance sector by providing a full range of high quality, best practice technical inputs and support to all industry stakeholders in a sustainable and demand driven manner; to support programs and activities for micro-financing activities pursuant to RA 8425, and to operate rapid relief, long-term recovery and sustainable development programs; to provide education and training in the field of human resources in order to develop, improve and make progress to the microfinance industry sector, micro and small progress to the microfinance industry sector, micro and small business enterprises, and marginalized members of society; and to change fees for services related to training, research, and other development activities to support the microfinance industry. In reply, please be informed that this Office cannot yet issue the requested ruling/certificate of tax exemption. It has 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. It shall file the necessary annual information return instead of an income tax return on or before April 15 of each year following the start of its operation as an exempt organization as required under Section 24 of Revenue Regulations No. 2. Based on such information return, the BIR Revenue District Office which has jurisdiction over MICRA Philippines Foundation, Inc. shall conduct the necessary investigation on its activities undertaken during the period. The letter of exemption shall thereafter be issued depending upon the result of our investigation. However, MICRA Philippines Foundation, Inc. shall be subject to the corresponding internal revenue taxes imposed under the Tax Code of 1997, as amended, on income derived from any of its properties, real or personal, or activity conducted for profit regardless of the disposition thereof, which income should be returned for taxation. acTDCI Likewise, interest income from currency bank deposits and yield or any other monetary benefit from deposit instruments and from trust funds and similar arrangements, and royalties derived from sources within the Philippines are subject to 20% final withholding tax; provided, however, that the interest income it derives from a depository bank under the expanded foreign currency deposit system shall be subject to a final withholding tax of 7 1/2% pursuant to Section 27 (D) (1) in relation to Section 57 (A) of the Tax Code of 1997, as amended. Moreover, as a non-stock and non-profit exempt entity, MICRA Philippines Foundation, Inc., is required to file on or before the 15th day of the fourth month following the end of the cooperative's accounting period a Profit and Loss Statement and Balance Sheet with 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 MICRA Philippines Foundation, Inc. shall be constituted as a withholding agent for the government if it acts as an employer and any of its employees receives compensation income subject to withholding tax, or if it makes payments to individuals or corporations subject to the withholding tax provided for in Section 57 of the Tax Code of 1997, as amended. Finally, MICRA Philippines Foundation, Inc.'s books of accounts and other pertinent records shall be subject to periodic examination by revenue enforcement officers of this Bureau for the purpose of ascertaining whether it has complied the conditions under which it may be granted tax exemption or tax incentives and/or has paid its tax liability, if any, pursuant to Section 235 of the Tax Code of 1997, as amended. (BIR Ruling DA-S-30-102-2008 dated June 11, 2008) For purposes of securing a permanent exemption after the three (3)-year period, MICRA Philippines Foundation, Inc. is required to submit the following documents pursuant to Revenue Memorandum Circular No. 14-2001: 1) Certified true copy of the Certificate of Registration with the SEC; 2) Certified true copy of the Articles of Incorporation which includes the following provisions: a. That the corporation is non-stock, non-profit; IcHDCS b. That the primary purpose for which it was created is one of those enumerated under Sec. 30 of the Tax Code of 1997, as amended; c. That no part of the net income shall inure to the benefit of any its members; d. That the trustees do not receive any compensation; and e. In case of dissolution, assets of the corporation shall be transferred to similar institution or to the government. 3) Certified true copy of the By-Laws; 4) Certified true copy of the Annual Information Returns and Financial Statements for the last three (3) years of operation; 5) Certified true copy of the DECS, or CHED, or TESDA recognition, as the case may be ; 6) Sworn Affidavit of Non-Forum Shopping; and 7) BIR Certificate of Registration. 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) MARISSA O. CABREROS OIC-Assistant Commissioner Legal Service