BIR Ruling No. 571-2017

REPUBIC OF THE PHIIPPINES

DEPariMHnI OF FInanCE BUREAU OF INTERNAL REVENUF

Quezon City

Circular No. 8-2014 Revenue Memorandum Order No. 20-2013: Revenue Memorandum 7 Person to Contact: Chief, Law Division Tel No. 926-5536/927-0963

Date: December 7, 2017

NATIONAL POWER CORPORATION

Agham Road, Diliman PROVIDENT FUND Quezon City

Attention: Paquito F. Garcia

Gentiemen: Chairman

Provident Fund needs revalidation pursuant to Revenue Memorandum Order (RMO) 20-2013 dated July 22, 2013 and whether or not RMO 20-2013 is applicable on this on whether or not BIR Ruling No. matter. Provident Fund established by the National Power Corporation (NPC Provident Fund) This refers to your letter dated 17 February 2015 inquiring on behalf of the dated Octobcr 3, 2008 issued to NPC

issued a Certificate of T'ax Exemption per BIR Ruling No. established by virtue of NPC Board Resolution No. 2007-58 issued on September 14. 2007 pursuant to Section 6 of Republic Act (RA) 6395, otherwise known as the Revised Charter of the National Power Corporation, as amended. The NPC Provident Fund was October 3. 2008. It is shown, based on the documents submitted, that NPC Provident Fund was dated

non-profit corporations and associations under Section 30 of the 1997 Tax Code, as 30 of the Tax Code of 1997 and, therefore, RMO No. 20-2013 is not applicable. policies and guidelines in the issuance of tax exemption rulings to qualified non-stock. amended. which exempts from income tax the income derived by the corporations and organizations described therein received by them as such. Considering that the NPC Provident Fund is not categorized as a non-stock, non-profit corporation under Section 30 of the 1997 Tax Code, as amended, it is not qualified for tax exemption under Section In reply, please be informed that RM0 No. 20-2013 was issucd to prescribc the

noteworthy is Revenue Memorandum Circular (RMC) No. 8-2014 which requires the individuals/entities claiming exemption from withholding tax. RMC No. 8-2014 states: presentation of a valid, current and subsisting tax exemption certificate or ruling from Anent the issue on the need to revalidate BIR Ruling No.

71-2C 37

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of 1997, as amended (Tax Code), defines taxable income as: "Section 31 of the National Internal Revenue Code

personal and additional exemptions, if any, authorized for term 'taxable income' means the pertinent items of gross income specified in this Code, less the deductions and/or such types of income by this Code or other special laws." Section 31. Taxable Income Defined. - - The

Section 32 (A) in relation to Section 27 (A) of the Tax Code defines gross income as follows: In connection with Section 31 as defined above.

otherwise provided in this Title, gross income means all commissions, and similar items; trade or business or the exercise of a profession; income derived from whatever source, including (but not limited to) the following items: paid, including, but not limited to fees, salaries. wages. (10 ((8) ( ) ( (3} ((4} A} Compensation for services in whatever form Gross income derived from the conduct of Prizes and winnings: Gains derived from dealings in property; Interests; Royalties: Dividends; Pensions: and General Definition. Rents; Annuities: Except when

income of the general professional partnership." (1) Partner's distributive share from the net

No. 02-1998, as amended, certain items of income are made subject to the payment of withholding taxes (final tax. creditable/expanded withholding tax, withholding tax on compensation) at the rates prescribed therein. of the Tax Code, in relation to Revenue Regulations (RR) Pursuant to Sections 57 to 59 and Sections 78 to 83

imposition of taxes on income and, consequently. from withholding taxes. entities and transactions are considered exempt from administrative issuances. however. some individuals. Under the provisions of existing tax laws and

Page 3 of 3 NPC Provident Fund D71-;3017 12-7-X17

the Tax Code." (Underscoring supplied) from time to time, before payment of the related income. The tax exemption certificate or ruling must explicitly recognize the grant of tax cxemption, as well as the corresponding the part of the taxpayer to present the said tax exempion certificate or ruling as herein required shall subject him to the pavment of appropriate withholding taxes due on the transaction. On the other hand, the withholding agent's failure to withhold notwithstanding the lack of tax penalties under Section 251 and other pertinent Sections of shall. require all individuals and_entities claiming.such exemption to provide a copy of a valid, current_and subsisting tax exemption certificate or ruling. as per existing exemption from imposition of withholding tax. Failure on exemption certificate or ruling shall cause the imposition of administrative issuances and any issuance that may be issued In this regard, the concerned withholding agents

No. 8-2014 in order to continue enjoying its exemption from income tax and valid, current and subsisting tax exemption certificate or ruling pursuant to RMC applicable withholding tax. activities the income from which is subject to withholding tax, it has to secure a Based on the foregoing, if NPC Provident Fund is engaged in investment

Please be guided accordingly.

Very truly yours. v

Commissioner of Internal Revenue CAESAR R. DULAY

011.6.5.5 K1