ITAD Ruling No. 180-02

October 15, 2002 ITAD RULING NO. 180-02 Sec. 30 NIRC BIR Ruling UN-041-2-8-94 BIR Ruling 362-60 Philippine Austrian Cultural Society, Inc. SGV Building, 6760 Ayala Avenue, Makati Attention: Miss Stella Gonzalez President Gentlemen : This refers to your letter dated September 23, 2002 requesting that the proceeds to be derived from the concerts of the Vienna Boys Choir in Manila be exempt from tax. It is represented that the Philippine-Austrian Cultural Society, Inc. is a non-stock, non-profit cultural organization created for the purpose of promoting mutual understanding of the culture and tradition of both the Philippines and Austria, thereby developing a closer relation and ties of friendship between the two countries; that the said society, in coordination with the Austrian Embassy, organized two (2) concerts of the Vienna Boys Choir to be held in Manila on 3 and 4 October 2002; that the members of the said Choir were given Special Work Permits (SWP) for a period of up to October 6, 2002 per SWP Docket No. ADD-2002-099 dated September 13, 2002 issued by the Bureau of Immigration; that the proceeds of the said concerts will inure to the benefit of the Children's Hour Foundation, Basilan Children's Fund and SOS Kinderdorf, Philippine Chapter, amongst others; and that no part of such proceeds shall inure to the benefit of any member, organizer, officer of the said Society nor to any specific person. In reply, please be informed that Sec. 30 of the National Internal Revenue Code (NIRC) of 1997 provides, viz : SEC. 30. Exemptions from Tax on Corporations . The following organizations shall not be taxed under this Title in respect to income received by them as such: xxx xxx xxx (E) Non-stock corporation or association organized and operated exclusively for religious, charitable, scientific, athletic, or cultural purposes, or for the rehabilitation of veterans, no part of its net income or asset shall belong to or inure to the benefit of any member, organizer, officer or any specific person; xxx xxx xxx Notwithstanding the provisions in the preceding paragraphs, the income of whatever kind and character of the foregoing organizations from any of their properties, real or personal, or from any of their activities conducted for profit regardless of the disposition made of such income, shall be subject to tax imposed under this Code. Based on the afore-cited provisions, a non-stock entity organized and operated exclusively for cultural purposes is exempt from tax if no part of its income inures to the benefit of any of its member, organizer, officer or to any specific person. However, income from the properties of said entity or from any of its activities conducted for profit, regardless of the disposition thereof, shall be subject to tax. Considering that the Austrian Cultural Society, Inc. is a non-stock entity organized and operated exclusively for cultural purposes, and since the benefit concerts of the Vienna Boys Choir are not conducted for profit but for the welfare of the Children's Hour Foundation, Basilan Children's Fund and SOS Kinderdorf, Philippine Chapter, and that no part of such proceeds shall inure to the benefit of any member, organizer, officer or any specific person, hence this Office is of the opinion and so holds that the proceeds to be derived from the benefit concerts of the Vienna Boys Choir as organized by the Philippine-Austrian Cultural Society, Inc. are not subject to tax, pursuant to Section 30 of the NIRC of 1997. ( BIR Ruling No. 362-60; BIR Ruling UN-041-2-8-94 ) This ruling is issued on the basis of the facts as represented. However, if upon investigation it shall be disclosed that the facts are different, then this ruling shall be without force and effect insofar as the herein parties are concerned. HAICTD Very truly yours, Commissioner of Internal Revenue By: (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service