Green Makers Association, Inc.

July 8, 2010 BIR RULING [NSNP-(S30G-007) 065-10] Section 30 (G); S30-027-2006 Green Makers Association, Inc. Imperial Court Subdivision 1 Legaspi City Attention: Ms. Jocelyn A. Apodaca President Gentlemen : This refers to your letter dated March 2, 2010 requesting for exemption from the payment of income tax and filing of the corresponding income tax return under Section 30 of the Tax Code of 1997. Documentary evidence submitted to this Office disclosed that the Green Makers Association, Inc. is a non-stock, non-profit corporation duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CN200832392 dated January 18, 2010 with TIN 004-979-254-000; that the purposes for which the corporation was organized are as follows, to wit: 1. To form a strong, cohesive and solid officers and members of the association, to foster cooperation, and to develop and improve the economic condition of the people, the barangay and the community as a whole; 2. To participate in the development, rehabilitation and restoration of the country's degraded watershed areas, national parks and forest lands; 3. To be involved in any activity that shall uplift the socio-economic condition of the community; EcTDCI 4. To provide seedlings at different barangays free of cost within the province of Albay, subject to its availability; 5. To help promote the agro-forestry farm system technology through provision of planting materials for free. 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 as yet issue the requested ruling/certificate of tax exemption because GREEN MAKERS ASSOCIATION, INC. 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. GREEN MAKERS ASSOCIATION, 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 No. 2 (Collector vs. Sinco, G.R. L-9276 dated October 23, 1956) . Based on such information return, we shall conduct the necessary investigation on the activities undertaken during the period. The determination letter of exemption shall thereafter be issued depending upon the result of our investigation. It should be understood that the as a non-stock, non-profit corporation, it shall be constituted as withholding agent of the government if it acts as an employer and its employee receives 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 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 Revenue Regulations No. 2-98, as amended. 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. CSTHca Moreover, GREEN MAKERS ASSOCIATION, INC. is required to file on or before the 15th day of the fourth month following the close of its accounting period a Profit & Loss Statement and Balance Sheet with the Annual Information Return under oath, stating the gross income and expenses incurred during a given taxable year. Finally, GREEN MAKERS ASSOCIATION, INC.'s books of accounts and other pertinent records shall be subject to periodic examination by the Bureau for the purpose of ascertaining whether it has complied to the conditions under which it may be granted tax exemption or tax incentives and/or has paid its liability, if any, pursuant to Section 235 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 (RMC) 14-2001: 1. SEC Registration; HIDCTA 2. Amended Articles of Incorporation which must include the following provisions pursuant to Section 30 (E) of the Tax Code: a. That no part of the net income shall inure to the benefit of any of its members; b. That the trustees do not receive any compensation; and c. In case of dissolution, the 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 covering the latest three (3) years. Very truly yours, (SGD.) MARISSA O. CABREROS OIC-Assistant Commissioner Legal Service