BIR Ruling No. 293-2016

REPUBLICOF THE PHILIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE

Certificate of Tax Exemption No.

293-2016

CERTIFICATE OF TAX EXEMPTION

issued to

Quezon Avenue, San Fernando City,La Union CHRIST THE KING COLLEGE SEC Company Reg. No. TIN

Revenue Code of 1997, as amended. It is exempt from INCOME TAX only on the following revenues or receipts: primary purpose is one of those enumerated under Section 30(H) of the National Internal This certifies that the above-named corporation has proven by actual operation that its

1. Tuition and Matriculation Fees; 2 School and Miscellaneous Fees; and 3.Donations.

nothing follows

integral part hereof. It is liable, however. to all other taxes not enumerated above. subject to the provisions of applicable BIR rules and regulations and the tax exemptions, liabilities and responsibilities stated in the Terms and Conditions hereto attached and made an

earlier revoked by this Office for violation of any provisions of applicable rules and regulations of BIR, or the terms and conditions herein set forth. This certification shall be valid for three (3) years from the date of issuance unless

revalidation provided under Revenue Memorandum Order (RMO) No. 20-2013. Failure to renew this Certificate shall be deemed a revocation thereof upon the expiration of the three 3)-year period. This Certificate may be renewed upon filing of a subsequent application for

documents as represented and submitted. However, if upon investigation, the BIR ascertains that the facts are different, then this Certificate shall be considered null and void. This Certificate of Tax Exemption is being issued on the basis of the facts and

Issued this day of_JUN 272D

K-J-VDPM Commissioner of Internal Revenue KIM S. JACINTO-HENARES 042368

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TERMS AND CONDITIONS

OF THE CERTIFICATE OF TAX EXEMPTION

For Non-Stock, Non-Profit Educational Institution Under Section 30(H) of the National Internal Revenue Code of 1997, as Amended

To be entitled to the tax exemptions enumerated herein, the Non-Stock, Non-Profit Educational Institution' must continue to meet the following requirements:

1) It must be organized as non-stock, non-profit educational institution duly accredited by the Department of Education (DepEd), the Commission on Higher Education (CHED).

and/or the Technical Education and Skills Development Authority (TESDA);

2) The revenues should be derived pursuant to its purposes as an educational institution and used actually, directly and exclusively for educational purposes:

3)The educational institution shall not distribute dividends;

4) The educational institution shall be governed by trustees who shall not receive any

compensation or remuneration;

5) All the net income or assets of the corporation or association must be devoted to its purpose/s.

6) The level of administrative expenses of which shall, on an annual basis, not exceed thirty percent (30%) of the total expenses for the taxable year; and

7) The assets of which, in the event of dissolution, would be distributed to another purpose, or purposes, or to the state for public purpose, or would be distributed by a accredited NGO organized for similar purpose or purposes, or to the State for public

competent court of justice to another accredited NGO to be used in such manner as in the judgment of said court shall best accomplish the general purpose for which the dissolved organization was organized.

8) It must not be a branch of a foreign non-stock. non-profit corporation.

TAX EXEMPTIONS

1)INCOME TAX. CHRIST THE KING COLLEGE is exempt from the payment of income tax only on revenues and receipts enumerated on the Certificate of Tax Exemption. The

exemption contemplated herein refers to internal revenue taxes imposed by the National

Government Accreditation:

Government Recognition (R-1) Government Recognition (R-I) No.PE-001 S.2003 Department of Education Recognition No. Certificate of Operation issued on 20 September 2013 Issued on January 13,2003 Issued on January 13. 2003 (Mention if issued a Certificate of Good Standing) Date Issued /Valid Until Pre-Elementary Elementary Course

No.SE-017 S.2002 Government Recognition (R-1) No.E-002 S.2003 Certificate of Operation issued on 20 September 2013Curriculum Certificate of Operation issued on 20 September 2013 November 27.2002 Basic Education

CHRISTTHE KING COLLEGE CTE No.293-2016

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Government on all revenues and assets of non-stock, non-profit educational institutions used actually, directly and exclusively for educational purposes.

taxation provided they are owned and operated by it as ancillary activities. Moreover. revenues derived from assets used in the operation of cafeterias/cantecns and bookstores located within the premises of CHRIST THE KING COLLEGE are exempt from

2) FINAL TAX ON INTEREST INCOME.CHRIST THE KING COLLEGE's interest income from currency bank deposits and yield from deposit substitute instruments used actually, directly subject to compliance with the conditions that as a tax-exempt educational institution it shall on an annual basis submit to the Revenue District Office concerned an annual information return and duly audited financial statement together with the following: final tax and 7 1/2% tax on interest income under the expanded foreign currency deposit system imposed under Section 27 (D)(1) of the National Internal Revenue Code of 1997, as amended, and exclusively in pursuance of its purpose as an educational institution. are exempt from the 20%

income under the expanded foreign currency deposit system imposed by Section 27 (D) (1) of (a) Certification from their depository banks as to the amount of interest income earned from passive investment not subject to the 20% final withholding tax and 7 1/2% tax on interest the National Internal Revenue Code of 1997, as amended;

(b) Certification of actual utilization of the said income; and

(c) Board Resolution by the school administration on proposed projects (i.e., construction the 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 following the end of its taxable year (Sec. 4, Finance Department Order No. 137-87). and/or improvement of school buildings and facilities, acquisition of equipment. books and

3) VALUE ADDED TAX (VAT)ON EDUCATIONAL SERVICES. Pursuant Section 109(H) of the National Internal Revenue Code of 1997.as amended,CHRIST THE KING COLLEGE's gross receipts from operations as a non-stock, non-profit educational institution are exempt from

Hence,as long as CHRIST THE KING COLLEGE will not engage in the regular conduct or pursuit of a commercial or economic activity, including transactions incidental thereto,it will remain exempt from VAT.

4) DONOR'S TAX. Donations to CHRIST THE KING COLLEGE are exempt from the payment of donor's tax pursuant to Section 101(A)(3) and (B)(2) of the National Internal Revenue Code of 1997, as amended, subject to the condition that not more than thirty percent (30%) of said gift shall be used for administration purposes.

a)Deductibility of Donations to Accredited Non-stock, Non-profit Corporations/NGOs RR 13-98)-Donations to accredited non-stock, non-profit corporations/NGOs shall be entitled to the following benefits:

Department Order No.149-95 dated November 24, 1995 amending Department Order No. 137-87

3 -"Non-stock, non-profit corporation or organization" shall refer to a corporation or association/organization referred to under Section 30 (E) and (G) of the Tax Code created or organized under Philippine laws exclusively for one or more of the following purposes:

I. religious; 2. charitable;

CHRISTTHE KING COLLEGE Page 4 of 7 CTENo Date issued_

i Limited Deductibility-Donations. contributions or gifts actually paid or made within

the taxable year to accredited non-stock,non-profit corporations shall be allowed limited

deductibility in an amount not in excess of ten percent (10%) for an individual donor, and

five percent (5% for a corporate donor, of the donor's income derived from trade.

business or profession as computed without the benefit of this deduction.

ii Full Deductibility. --- Donations, contributions or gifts actually paid or made within the

taxable year to accredited NGOs shall be allowed full deductibility, subject to the

following conditions:

1 The accredited NGO shall make utilization directly for the active conduct of the

activities constituting the purpose or function for which it is organized and operated.

not later than the fifteenth (15th) day of the third month after the close of the

accredited NGOs taxable year in which contributions are received, unless an extended

period is granted by the Secretary of Finance, upon recommendation of the

Commissioner.

For this purpose, the term "utilization" shall have the meaning as defined

under Sec.I(c) of these Regulations.

(2) The level of administrative expenses of the accredited NGO, shall, on an annual

basis, not exceed thirty percent (30%) of the total expenses for the taxable year.

(3) In the event of dissolution, the assets of the accredited NGO, would be distributed to

another accredited NGO organized for similar purpose or purposes, or to the State for

public purpose, or purposes, or to the state for public purpose, or would be distributed

by a competent court of justice to another accredited NGO to be used in such manner as in the judgment of said court shall best accomplished the general purpose for

which the dissolved organization was organized.

(4) The amount of any charitable contribution of property other than money shall be

based on the acquisition cost of said property.

(5) All the members of the Board of Trustees of the non-stock, non-profit corporation.

organization or NGO do not receive compensation or remuneration for their service

to the aforementioned organization.

b)Accreditation as a Donee Institution for Purposes of Full Deductibility. For purposes

of full deductibility from the taxable business income of its donor, CHRIST THE KING

COLLEGE must first be accredited with the Philippine Council for NGO Certification, Inc.

scientific:

A athletic:

6. 5. rehabilitation of veterans; and cultural;

no part of the net income or asset of which shall belong to or inure to the benefit of any member. organizer. social welfare

officer or any specific person.

4 Non-government Organization (NGO)" - shall refer to a non-stock, non-profit domestic corporation or

organization as defined under Section 34H)2(c) of the Tax Code organized and operated exclusively for

scientific, research, educational, character-building and youth and sports development. health. social welfare.

cultural or charitable purposes, or a combination thereof, no part of the net income of which inures to the benefit

of any private individual.

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Entity pursuant to Memorandun of Agreement dated January 29, 1998 executed by and between the Secretary of Finance and PCNC's Interim Chairman. (PCNC) which has been duly designated by the Secretary of Finance as the Accrediting

LIABILITY FOR INTERNAL REVENUE TAXES

1) INCOME TAX

not expressly exempted and stated in the Certificate of Tax Exemption. CHRIST THE KING COLLEGE is subject to income tax on all its income/receipts/revenues

Moreover, it is subject to the corresponding internal revenue taxes imposed under National Internal Revenue Code of 1997, as amended, on its income derived from any of its properties, real income should be returned for taxation. or personal, or any activity conducted for profit regardless of the disposition thereof, which

under the expanded foreign currency deposit system shall be subject to seven and one-half percent 7-1/2%) final withholding income tax pursuant to Section 27(D)(1) in relation to Sec. 57(A) both derived from sources within the Philippines are subject to the twenty percent (20%) final of the National Internal Revenue Code of 1997, as amended. 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 withholding tax: Provided, however, that interest income derived by it from a depository bank

educational institution, shall be subject to the twenty percent (20%) final withholding tax. Further, to reiterate, in case of failure to comply with the conditions under Department Order No. instruments even if used actually, directly and exclusively in pursuance of its purpose as an 137-87, interest income from currency bank deposits and yield from deposit substitute

2) VALUE ADDED TAX ON SALE OFOTHER GOODS& SERVICES

payment may legitimately be passed on to buyers of such goods and services. the same Code if the gross sales or receipts from such sale of goods and services do not exceed One Million Nine Hundred Nineteen Thousand Five Hundred Pesos (P1,919,500.00) which tax subject to the 12% VAT imposed under Sections 106 and 108 of the Tax Code of 1997, as amended, or 3% percentage tax imposed under Section 116 in relation to Section 109 (1)(V) of Activities involving sale of goods and services not in connection with its primary purposes are

imposed in Sections 106 to 108 of the same Code. Section 105 of the National Internal Revenue Code of 1997, as amended, provides that any person who, in the course of trade or 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)

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

5 For further inquiries on the accreditation and certification process, please visit PCNC at 6/F. SCC Building. CFA-MA Compound, 4427 Interior Old Sta. Mesa, 1016 Manila Telephone Numbers 715-9594.715-2756,782- 1568 and 715-2783 (telefax) website: www.penc.com.ph email thein at pcnc@pldtdsl.net

CHRISTTHE KING COLLEGE Page 6 of 7 Date issued 6-27-2016 CTE No. 293-2016

the course of a business pursuit, including transactions incidental thereto, in general. it shall be liable for VAT Accordingly,if CHRIST THE KING COLLEGE is engaged in the sale of goods or services in

5.VATON PURCHASES

an indirect tax payable by the seller and not by the purchaser of goods. However, being an goods or services sold, it is no longer a tax but an additional cost which the buyer/customer has to pay in order to obtain the goods or services. amended, covers only income taxes for which it is directly liable. It should be noted that VAT is indirect tax, it can be shifted or passed on to the buyer/purchaser, transferee or lessee of the goods, properties or services. Once shifted to the buyer/customer as an addition to the cost of The tax exemption granted to CHRIST THE KING COLLEGE as a non-stock, non-profit educational institution under Section 30(H) of the National Internal Revenue Code of 1997,as

of 1997, as amended, to avoid the passing on or shifting of the VAT. Thus, the shifting of the VAT to it does not make it the person directly liable and therefore, it cannot invoke its tax exemption privilege under Section 30 of the National Internal Revenue Code

6 WITHHOLDING TAX

corporations subject to the withholding tax pursuant to Section 57 of the National Internal Revenue Code of 1997, as amended, and as implemented by Revenue Regulations No. 2-98, as if it acts as an employer and its employees receive compensation income subject to the withholding tax under Section 79 (A), Chapter XIII, Title Il of the NIRC, as implemented by Revenue Regulations No. 2-98, as amended, or if it makes income payments to individuals or amended. CHRIST THE KING COLLEGE shall be constituted as withholding agent for the government

TAXPAYER DUTIES & RESPONSIBILITIES

1) The Articles of Incorporation of CHRIST THE KING COLLEGE must include the following provisions pursuant to RMO 20-2013 and RMC14-01:

e)in case of dissolution, assets of the corporation shall be transferred to similar institution or to b)that the primary purpose for which it was created is one of those enumerated under Sec. 30 of c) that no part of the net income shall inure to the benefit of any its members: d)the trustees do not receive compensation or remuneration; and a)that the corporation is non-stock, non-profit; the government the Tax Code of 1997:

Any change or amendment in the charter, By-Laws, Articles of Incorporation, manner of activities as well as sources and disposition of income should be communicated immediately to the Revenue District Officer where it is registered.

2) CHRIST THE KING COLLEGE is likewise required to file on or before the 15th day of the incurred during the preceding period and a certificate showing that there has not been any change disposition of income. fourth month following the end of the accounting period a Profit and Loss Statement and Balance Sheet with the Annual Information Return under oath, stating its gross income and expenses in its By-laws, Articles of Incorporation, manner of operation and activities as well as sources and

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3 Copy of this Certificate of Tax Exemption shall be attached to the aforementioned Annual Information Return.

4 Under Section 235 of the National Internal Revenue Code of 1997, as amended, any provision of pertinent records of tax-exempt organization or grantees of tax incentives shall be subject to it has been granted tax exemptions or tax incentives,and its tax liabilities, if any. existing general and special law to the contrary notwithstanding, the books of accounts and other examination by the BIR for purposes of ascertaining compliance with the conditions under which

5Further, it is also required under Section 6(C) in relation to Section 237 of the National Internal Revenuc Code of 1997, as amended, to issue duly registered receipts or sales or commercial related to the activities for which the Association is registered. (Revenue Memorandum Circular No.[RMC] No.76-2003). invoices for each sale or transfer of merchandise or for services rendered which are not directly

6) Finally, it is subject to the payment of registration fee of PhP 500.00 as prescribed in Section 236(B) of the National Internal Revenue Code of 1997, as amended.