BIR Ruling No. 582-2018

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE

BUREAU OF INTERNAL REVENUE Quezon City

n

Section 30E of the National

Internal Revenue Code of

BIR Ruling No.001-2017 1997, as amended

582-2018 APR 0 3 2018

Cabanatuan City, 3100 Nueva Ecija COLLEGE FOR RESEARCH & TECHNOLOGY OF CABANATUAN, INC.

Attention: DR. REYNATO C. ARIMBUYUTAN

President

Gentlemen:

being enjoyed by non-stock, non-profit educational institution under Section 30 (H) of the RESEARCH& TECHNOLOGY OF CABANATUAN,INC., for tax exemption certificate National Internal Revenue Code of 1997, as amended. This refers to your undated letter, applying on behalf of COLLEGE FOR

Background:

existing under the laws of the Republic of the Philippines. It was incorporated as a STOCK CORPORATION and registered with the Securities and Exchange Commission (SEC) under Company Registration No. corporation to non-stock, non-profit corporation. In its Amended Articles of Incorporation, the purposest for which it was created are: with Taxpaver's Identification No. (TIN) No. COLLEGE FOR RESEARCH & TECHNOLOGY OF CABANATUAN, INC. dated January 01, 1997, is a corporation duly organized and On February 16, 2016. it was converted from stock and BIR Certificate of Registration

and post-graduate courses on all branches of science, technology and necessary for personal community and national development; business in order to develop among its clientele proper values and attitude To establish, maintain and operate an educational institution or institutions for the instruction and training of the youth for basic education, non-degree technical/vocational education, and collegiate courses as well as graduate

2 To organize, conduct and carry on any activity whatsoever which is necessarv for, or incidental to, the purpose of the corporation and generally to do all such things and to perform all such activities as may be. directly or indirectly, necessary to the attainment of the above mentioned objectives: and

3 To establish, maintain and operate a facility or facilities which is necessars

for, or incidental to, the purpose of ihe corporation and generally to serve and perform ancillary activities, necessary to the attainment of the above mentioned objectives such as competency assessment cenier, student canteen, publication, medical and dental clinic, guidance and psychological assessment center and other facilities as learning resource and support structures for the students.

+ Sccond Article, Amended Articles of Incorporation

COLLEGE FOR RESEARCH & TECHNOLOGY OF CARANATUAN, INC. 582-2018 APR 03 2018

and/or Technical Education and Skills Development Authority (TESDA): TECHNOLOGY OF CABANATUAN, INC. was permitted and granted the following program registrations and recognitions by the Commission on Higher Education (CHED) Also, as. aneducational._ institution.COLLEGEFORRESEARCH &

9. 10.Two-Year 5 6. X Programming) Bachelor of Bachelor of Science Two-Year Restaurant Management NC Level 2 Two-Year Bachelor of Technical Teacher Education Bachelor of Science Restaurant Manageinent Two-Year Information Bachelor of Science in Information (Major in Food Service Management) Management Technician Technology Bachelor of Science in Information Technology under Executive Order No. Technology 358 Technology Associate Electronics Electronics PROGRAM Computer Technology Science In in & & in in Science Accounting (Computer Hotel Computer Hotel Computer Tourism in & & AGENCY TESDA TESDA TESDA TESDA CHED CHED CHED CHED CHED CHED Registration Certificate (WTR) No. Registration Certificate (NTR) No. Registration WTR No. Certificate of Authority No. Government Recognition No. Government Recognition No. Government Recognition Government Recognition No. Government Recognition No. Government Recognition (GR) No. Certificate of TVET Program CERTIFICATE NO. Series of Series of Series of Series of Scries of Series of Series of

Certificate of Tax Exemption because COLLEGE FOR RESEARCH& TECHNOLOGY is really a non-stock and non-profit educational institution exenpt from income tax under Section 30 (H) of the National Internal Revenue Code of 1997, as amended. (BIR Ruling No. OF CABANATUAN, INC. has to prove by actual operation for at least three (3) years that it 001-2017 dated January 05,2017) 20. Programming NC IV 17. Housekeeping NC II 15.Bookkeeping NC III 16. Food and Beverage Services NC I1 18. Bartending NCII 19. Computer Hardware Servicing NC II 13. Two-Year Computer Secretarial 14. PC Operations NC II 12. Three-Year Computer Engineering & I1. Two-Year Computer Management Hardware Technology In reply, please be informed that this Office cannot as yet issue the requested TESDA TESDA TESDA TESDA TESDA TESDA TESDA TESDA TESDA TESDA Registration WTR No. Registration WTR No. Registration WTR No. Registration WTR No. Registration WTR No Registration WTR No. Registration WTR No. Registration Certificate (NTRNo. Registration Certificate (NTR) No. Registration Certificate (NTR) No. Certificate of TVET Program Certificate of TVET rooram Certificate of TVET Program Certificate of TVE Program Certificate of TVET Program Certificate of TVET rrogram Certificate of TVET Program , Series of Series of Series of

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582-2018

COLLEGE FOR RESEARCH & TECHNOLOGY OF CABANATUAN, INC. APR 0 3

CABANATUAN, INC. can file the necessary annual information return instead of an income In the meantime, COLLEGE FOR RESEARCH & TECHNOLOGY OF

tax return on or before the fifteenth (15th) day of the fourth (4th) month following the end of its taxable year as required under Section 24 of Revenue Regulations No. 2-40 dated February 10. 1940.2 Based on such information return, we shall conduct the necessary investigation on the activities undertaken during the period. The letter of exemption shall thereafter be issued

depending upon the result of our investigation.

INC. is subject to the corresponding internal revenue taxes imposed under the National Internal Thus. COLLEGE FOR RESEARCH & TECHNOLOGY OF CABANATUAN,

Revenue Code of 1997, as amended, 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

expanded foreign currency deposit system shall be subject to 15%_final withholding tax tax: provided, however, that interest income derived by it from a depository bank under the pursuant to Section 27 (D)(1), in relation to Section 57 (A), both of the National Internal

Revenue Code of 1997, as amended.

TECHNOLOGY OF CABANATUAN,INC.shall be constituted as withholding agent of the government if it acts as an employer and its employee receives compensation income subject Also. it should be understood that COLLEGE FOR RESEARCH &

to the withholding tax under Section 79 (A). Chapter XIII. Title II of the National Internal Revenue Code of 1997, as amended. 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 National Internal Revenue Code of 1997. as amended. also as implemented by Revenue Regulations No. 2-98, as amended.

amended, any provision of existing general and special law to the contrary notwithstanding. Moreover. under Section 235 of the National Internal Revenue Code of 1997, as

the books of accounts and other pertinent records of tax-exempt organization or grantees of tax incentives shall be subject to examination by the BIR for purposes of ascertaining compliance with the conditions under which it has been granted tax exemptions or tax incentives, and its tax liabilities, if any.

invoices for each sale or transfer of merchandise or for services rendered which are not directly related to the activities for which the Association is registered under Section 6 (C) in relation to Section 237 of the Same Code (Revenue Memorandum Circular (RMC) No. 76-2003). Pesos (PhP500.00) as prescribed in Section 236 (B) of the National Internal Revenue Code of 1997. as amended. It is also required to issue duly registered receipts or sales or commercial Furthermore. it is subject to the payment of the annual registration fee of Five Hundred

Value-Added Tax / Percentage Tax

Section 105 of the National Internal Revenue Code of 1997, as amended, provides that:

business, sells, barters, exchanges, leases goods or properties, renders services, and any person who imports goods shall be subject to the value-added tax (VAT) imposed in Sections 106 to 108 of the same Code. "SEC. 105. Persons Liable. - Any person who, in the course of trade or

XXX XXx XXX

3 Republic Act (RA) No. 10963 increased the tax rate from 7.5% to 15% effective January 01.2018 Collector vs. Sinco.G.R.L-9276 dated October 23.1956

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582-2018

COLLEGE FOR RESEARCH & TECHNOLOGY OF CABANATUAN, INC. APR 0 3 2018

exclusively to imembers or their guests), or government entity. transactions incidental thereto,hy any person regardless of whether or not the person engaged therein is a non-stock, non-profit private organizution (irrespective of the disposition of its net income and whether or not it sells conduct or pursuit of a commercial or an econonic activity, including The phrase "in the course of trade or business" means the regular

XXX xXX XXX

CABANATUANYNC. is engaged in the sale of goods or services in the course of a business receipts do not exceed Three Million Pesos (P3,000,000.00). Three Million Pesos (P3,000.000.00)4, or to the three percent (3%) percentage tax, if gross pursuit, including transactions incidental thereto, its revenues derived therefrom shall be subject to the twelve percent (12%) VAT, in case the gross receipts from such sales exceed Accordingly,if COLLEGE FOR RESEARCH & TECHNOLOGY OF

properties or services and importation of goods shall nevertheless be subject to the 12% VAT pursuant to Sections 106 to 108 of the said Code. Notwithstanding that it is a non-stock, non-profit corporation, its purchase of goods or

additional cost which the buyer/customer has to pay in order to obtain the goods or services. buyer/customer as an addition to the cost of goods or services sold, it is no longer a tax but an buyer/purchaser, transferee or lessee of the goods, properties or services. Once shifted to the purchaser of goods. Being an indirect tax. the amount of tax may be shifted or passed on to the It must be noted that VAT is an indirect tax payable by the seller and not by the

services or sale of goods made in the course of business but rather in connection with its non- stock, non-profit activities, is exempt from the 12% VAT. However, revenue from contributions and donations, not being derived from sale of

after the three (3)-year period,COLLEGE FOR RESEARCH & TECHNOLOGY OF CABANATUAN, INC. is required to submit the following documents pursuant to Revenue Memorandum Order (RMO) No. 44-2016: Finally.forpurposes securing aCertificate ofTax Exemption

(1) Original copy of the application letter for issuance of Tax Exemption Ruling:

(2) Certified true copy of the Certificate of Good Standing issued by the Securities and Exchange Commission (SEC):

(3) Original copy of the Certification under Oath by the Treasurer of the corporation or association as to the amount of income. compensation. salaries or any emoluments paid by the corporation or association to its trustees, officers and other executive officers:

(4) Certified true copies of the Financial Statements of the corporation or association for the last three (3) years:

(5) Certified frue copy of government recognition/permit/accreditation to operate as an educational institution issued by the Commission on Higher Education (CHED) and/or the Department of Education (DepEd):

(6) For TESDA-Accredited Institutions offering Technical and Vocational the TESDA Registrations of the TVET Programs/Courses offered Educational Training (TVET) Programs/Courses, certified true copies of

+ Republic Act (RA) No. 10963 increased the VAT threshold from P1.919.500.00 to P3.000.000.00 effective

January 01.2018

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COLLEGE FOR RESEARCH& TECHNOLOGY OF CABANATUAN, INC. 582-2018 APR 0 3 2018

7 If the government recognition/permit/accreditation to operate as an education institution was issued more than five (5) years prior to the educational institution is currently operating as such; application for tax exemption/revalidation, an original copy of a current Certificate of Operation/Good Standing, or other equivalent document. issued by the appropriate government agency (i.e.. CHED. DepEd, or TESDA) shall be submitted as proof that the non-stock and non-profit

(8) Original copy of a Certificate of Annual revenues and assets by the provide a breakdown of the following: Treasurer or his equivalent of the non-stock and non-profit educational institution. In accordance with the guidelines sct forth in Section 1.3 of Department of Finance (DOF) Order No. 137-87, the Certificate shall

a Any amount in cash or in kind (including administrative expenses) educational institution was created or organized, including grant of paid or utilized to accomplish one or more purposes for which the scholarship to deserving students and professorial chairs for the enhancement of professorial course.

b. Any amount paid to acquire an asset used (or held for use) directly in carrying out one or more purposes for which it was created or organized. including the upgrading of existing facilities to support the conduct of the above activities.

C. Any amount in cash or in kind invested in an activity related to the

educational purposes for which it was created or organized.

d Any amount set aside for a specific project, which must be supported by a Board Resolution issued by the school administration on following the end of its taxable year. proposed projects (i.e., construction and/or improvement of school like) to be funded out of the money deposited in banks or placed in money markets, on or before the 15th day of the fourth month buildings and facilities, acquisition of equipment, books and the

if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void This ruling is being issued on the basis of the foregoing facts as represented. However.

Very truly yours,

1ausaMun

K-I-LMAT Commissioner of Internal Revenue CAESAR R. DULAY 014904

COPY FURNISHED:

REVENUE REGION NO. 04 -- San Fernando, Pampanga Attention: Revenue District Office No. 23B -- South Nueva Ecija

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