Kabayan Action Group, Inc.

December 17, 2009 BIR RULING [NSNP-(S30G-090) 794-09] Section 30 (G);NSNP(S30h-058)289-2008 Kabayan Action Group, Inc. 520 EDSA near Santolan Crame Quezon City Attention: Mr. Jessie Magbanua Nietes President Gentlemen : This refers to your letter dated June 19, 2008 for a confirmation that as a non-stock, non-profit organization, it is exempt from tax. Documentary evidence submitted disclosed that the Kabayan Action Group, Inc. with TIN 223-587-763-000 is a non-stock, non-profit corporation registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CN200255970 dated September 18, 2002; and that the purposes for which the corporation is organized, among others are as follows, viz. : a. To aid the Philippine government's effort in totally eradicating poverty by unifying the Filipinos and reorienting them to a better way of living in complete comfort and convenience and in financial abundance through a series of seminars/training to be conducted by professional psychologists, educators, and business consultants; b. To aid the Philippine government's efforts in maintaining peace and order and eventually preventing the occurrence of violence and human rights abuses; and in minimizing, if not totally eradicating the incidence of crime. Based on the foregoing, this Office is of the opinion and so holds that the Kabayan Action Group, Inc. falls within the purview of a non-stock, non-profit institution as contemplated under Section 30 (G) of the Tax Code of 1997. 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. TaCSAD However, it is subject to the corresponding internal revenue taxes imposed under the National Internal Revenue Code of 1997 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 benefit 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 from 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 April 15 of each year a profit and loss statement and balance sheet with the annual information return under oath, stating its gross income and expenses incurred during the year 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 resources and disposition of income. It should be understood that the said exempt non-stock, non-profit organization shall be constituted as withholding agent for 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 No. 2-98, or if it makes income payments to individuals or corporations subject to the withholding tax pursuant to Section 57 of the Tax Code of 1997, also as implemented by Revenue Regulations No. 2-98. It is of course understood that its books of accounts and other pertinent records shall be subject to periodic examination by revenue enforcement officers of this Bureau for the purposes of ascertaining whether it has been complying with the conditions under which it has been granted tax exemption or tax incentives and its tax liabilities, if any, pursuant to Section 235 of the Tax Code of 1997. However, this ruling is subject to the condition that the organization shall submit copies of its financial statements and Annual Information Return for the last three (3) years in compliance with Revenue Memorandum Circular No. 14-2001, otherwise, it shall be given a temporary exemption instead. This ruling is being issued on the basis of the foregoing facts as represented. 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