Peacebuilders Community, Inc.

January 27, 2009 BIR RULING [NSNP-(S30G-007) 056-09] Sec. 30; S-30-032-2003 Peacebuilders Community, Inc. 123 University Avenue, Juna Subdivision Matina, Davao City Attention: Krizante C. Cruzado Admin. Officer Gentlemen : This refers to your letter dated October 01, 2007 requesting exemption from the payment of income tax and the filing of the corresponding income tax return under Section 30 of the Tax Code of 1997, as amended. DaCEIc Documentary evidence submitted to this Office disclosed that Peacebuilders Community, Inc. is a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CN200630697 dated December 04, 2007; that the corporation was formed to establish a peace center for peacebuilding teams; to prepare and equip peacebuilding teams leaders who will themselves be commissioned to form their respective peacebuilding teams and be assigned in conflicted areas; to oversee the actual work of the peacebuilding teams who would immerse themselves in local communities to develop genuine relationships; and to develop relational structures which will support the peacebuilding teams who will particularly work closely with local community leaders; and that no part of the income which the corporation may obtain as an incident to its operation shall be distributed as dividends to its members, trustees or officers. In reply, please be informed that this Office cannot yet issue the requested ruling/certificate of tax exemption. You have to prove by actual operation for at least three (3) years that you are really an organization/association exempt from income tax under Section 30 of the Tax Code of 1997, as amended. You can file the necessary annual information return instead of an income tax return on or before the 15th day of the fourth month following the start of your operation as an exempt organization as required under Section 24 of Revenue Regulations No. 2 ( Collector vs. Sinco, G.R. L-9276 dated 23 October 1956). Based on such information return, we shall conduct the necessary investigation on your activities undertaken during the period. The determination letter of exemption shall thereafter be issued depending upon the result of our investigation. TSIEAD However, Peacebuilders Community, 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. 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 you derive 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, you are required to file on or before the 15th day of the fourth month following the end of your accounting period Profit and Loss Statement and Balance Sheet with Annual Information Return under oath, stating your gross income and expenses incurred during the preceding period and a certificate showing that there has not been any change in your By-Laws, Articles of Incorporation, manner of operation and activities as well as sources and disposition of income. It should be understood that Peacebuilders Community, 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. For purposes of securing a permanent exemption after the three (3)-year period, you are required to submit the following documents pursuant to Revenue Memorandum Circular No. 14-2001: 1) SEC Registration; 2) Amended Articles of Incorporation which must include the following provisions: (a) that the corporation is a 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, as amended; CaESTA (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; and (e) in case of dissolution, assets of the corporation shall be transferred similar institution or to the government; 3) By-Laws; 4) Annual Information Return for the past three (3) years; and 5) Financial Statement (Balance Sheet) for the past three (3) years. Finally, your 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 you have been complying with the conditions under which you may be granted tax exemption or tax incentives and tax liability, if any, pursuant to Section 235 of the Tax Code of 1997, as amended. 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service