BIR Ruling No. 309-2016

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE

Certificate of Tax Exemption No.

309-2016

CERTIFICATE OF TAX EXEMPTION

issued to

ST.AUGUSTINE'S SCHOOL.INC.

Rizal,Tagudin.Hocos Sur 2714

TIN

SEC Company Reg.No.

This certifies that the above-named corporation has proven by actual operation that its

primary purpose is one of those enumerated under Section 30(H of the National Internal Revenue Code of 1997,as amended.It is exempt from INCOME TAX only on the following revenues or receipts:

1.Tuition and Matriculation Fees 2.Entrance and Other School Fees;and 3. Donations, gifts, charitable contributions, subsidies and other forms of

philanthropy. nothing follows

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 integral part hereof. It is liable, however, to all other taxes not enumerated above.

This certification shall be valid for three (3 years from the date of issuance unless

regulations of BIR, or the terms and conditions herein set forth. earlier revoked by this Office for violation of any provisions of applicable rules and

This Certificate may be renewed upon filing of a subsequent application for

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

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

Issued this day ofJUN 2206

K-NAC Commissioner of Internal Revenue KIM S.JACINTO-HENARES 042357

ST.AUGUSTINE'S SCHOOLINC CTE No. 309-2016 Page 2 of 7 Date issued 6-28-2016

TERMS AND CONDITIONS

OF THE CERTIFICATE OFTAX EXEMPTION

For Non-Stock,Non-Profit Educational Institution

Under Section 30(H of the National Internal Revenue Code of 1997,as Amended

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

1It must be organized as non-stock. non-profit educational institution duly accredited hy and/or the Technical Education and Skills Development Authority (TESDA) the Department of Education (DepEd, the Commission on Higher Education (CHED,

2) The revenues should be derived pursuant to its purposes as an cducational institution and

used actually.directly and exclusively for educational purposes:

3)The educational institution shall not distribute dividends;

4) The cducational 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 judgment of said court shall best accomplish the general purpose for which the dissolved organization was organized. 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 accredited NGO organized for similar purpose or purposes,or to the State for public

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

TAX EXEMPTIONS

1INCOME TAX.ST.AUGUSTINES SCHOOLINC.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 actually,directly and exclusively for educational purposes. Government on all revenues and assets of non-stock, non-profit cducational institutions used

Government Accreditation

Government Recognition (R-1 Giovernment Recognition (R-1) No.SE-004 S.2004 No.PE-006 S.2005 No.F-007 S.2005 iovernment Recognition R-1 Department of Education Recognition No. Certificate of Good Standing issuedMarch 31,2014 April 62004 Certificate of Good Standing issuedMarch 31.2014 Issued on Aril 28.2005 Certificate of Good Standing issuedMarch 31.2014 Issued on April 28,2005 (Mention if issued a Certificate of Good Standing) Date Issued/Valid Until Pre-Flementary Basic Education Curriculum Basic Hducation urrieulum -Sccondary Courses Gr1toVI Course

STAUGUSTINE'S SCHOOLINC Page 3 of 7 CTE No.3092016 Date issued6-28-2016

bookstores located within the premises of ST.AUGUSTINES SCHOOLINC.are exempt from taxation provided they are owned and operated by it as ancillary activities. Moreover. revenues derived from assets used in the operation of cafeterias/canteens and

2)FINALTAX ON INTEREST INCOME.ST.AUGUSTINE'S SCHOOLINC.s interest income from currency bank deposits and yield from deposit substitute instruments used actually

the 20% final tax and 7 1/2% tax on interest income under the expanded foreign currency deposit system imposed under Section 27(D1 of the National Internal Revenue Code of 1997.as directly and exclusively in pursuance of its purpose as an educational institution.are exempt from

return and duly audited financial statement together with the following: shall on an annual basis submit to the Revenue District Office concerned an annual information amended,subject to compliance with the conditions that as a tax-exempt educational institution it

a Certification from their depository banks as to the amount of interest income earned from

the National Internal Revenue Code of 1997, as amended passive investinent not subject to the 20% final withholding tax and 7 1/2% tax on interest income under the expanded foreign currency deposit system imposed by Section 27 (D)1) of

(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(VATON EDUCATIONAL SERVICES.Pursuant Section 109(Hof the National Internal Revenue Code of 1997,as amended.ST.AUGUSTINE'S SCHOOL INc.'s gross receipts from operations as a non-stock,non-profit educational institution are exempt from

Hence.as long as ST.AUGUSTINES SCHOOLINC.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 DONORS TAX.Donations to ST.AUGUSTINES SCHOOLINC.are exempt from the gift shall be used for administration purposes. Code of 1997.as amended, subject to the condition that not more than thirty percent (30%) of said payment of donor's tax pursuant to Section 101(A(3and (B(2 of the National Internal Revenuc

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

Department Order No.149-95 dated November 24.1995 amending Department Order No.137-87 referred to under Section 30 (E) and (G) of the Tax Code created or organized under Philippine laws exelusively for one or more of the following purposes: 3-Non-stock, non-profit corporation or organization shall refer to a corporation or association/organization 1 charitable: religious:

4. 3 scientific: athletic:

rchabilitation of veterans: and cultural:

G

social wclfare

ST.AUGUSTINE'S SCHOOL,INC Page 4 of 7 CTE No.0 Date issued

iLimited Deductibility.Donations, contributions or gifts actually paid or made within the taxable year to accredited non-stock,non-profit corporations shall be allowed limited business or profession as computed without the benefit of this deduction. 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

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:

l 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 Commissioner. accredited NGOs taxable year in which contributions are received,unless an extended period is granted by the Secretary of Finance, upon recommendation of the

under Sec.I(c of these Regulations. For this purpose, the term "utilization" shall have the meaning as defined

(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

which the dissolved organization was organized. as in the judgment of said court shall best accomplished the general purpose for

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, ST.AUGUSTINE'S Inc.(PCNC) which has been duly designated by the Secretary of Finance as the Accrediting between the Secretary of Finance and PCNC's Interim Chairman. SCHOOL,INC.must first be accredited with the Philippine Council for NGO Certification Entity pursuant to Memorandum of Agreement dated January 29,1998 executed by and

no part of the net income or asset of which shall belong to or inure to the henefit of any member. organizer. officer or any specific person

-Non-government Organization (NGO shall refer to a non-stock.non-profit domestic corporation or organization as defined under Section 34(H2(c of the Tax Code organized and operated exclusively for scientific,research. educational. character-building and youth and sports development. health, social welfare 5 For further inquiries on the accreditation and ccrtification process. please visit PCNC at 6/F,SCC Buitding cultural or charitable purposes. or a combination thereof. no part of the net income of which inures to the benefit of any private individual.

CFA-MA Compound.4427Interior Old Sta.Mesa.1016 Manila Telephone Numbers 715-9594.715-2756.782 1568 and 715-2783telefax)website:www.penc.com.ph email them at pcncu pldtdsl.net

ST.AUGUSTINE'S SCHOOL.INC Page 5 of 7 CTE No. Date issued o6 300..0.6

LIABILITY FOR INTERNAL REVFNUE TAXES

INCOMETAX

ST. AUGUSTINE'S SCHOOLINC is subject to income tax on all its income/receipts/revenues not expressly exempted and stated in the Certificate of Tax

Exemption.

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 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 twenty percent (20% final withholding tax: Provided, however,that interest income derived by it from a depository bank under the expanded foreign currency deposit system shall be subiect to seven and one-half percent 7-1/2% final withholding income tax pursuant to Section 27(D1 in relation to Sec.57A hoth

of the National Internal Revenue Code of 1997,as amended.

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

2)VALUE ADDED TAX ON SALE OF OTHER GOODS&SERVICES

subject to the 12% VAT imposed under Sections 106 and 108 of the Tax Code of 1997.as Activities involving sale of goods and services not in connection with its primary purposes are

amended. or 3% percentage tax imposed under Section 116 in relation to Section 1091V of

One Million Nine Hundred Nineteen Thousand Five Hundred Pesos (P1,919,500.00 which tax the same Code if the gross sales or receipts from such sale of goods and services do not exceed

payment may legitimately be passed on to buyers of such goods and services.

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 imposed in Sections 106 to 108 of the same Code.

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

liable for VAT Accordinglyif ST.AUGUSTINE'S SCHOOLINC.is engaged in the sale of goods or services in the course of a business pursuit, including transactions incidental thereto. in general. it shall be

5. VATONPURCHASESU Q

ST.AUGUSTINE'S SCHOOL,INC CTE No.309-2016

Page 6 of 7 Date issued6-28-2016

The tax exemption granted to ST.AUGUSTINE'S SCHOOLINC.as a non-stock,non-profit educational institution under Section 30H of the National Internal Revenue Code of 1997.as amended, covers only income taxes for which it is directly liable.It should he noted that VAT is

indirect tax, it can be shifted or passed on to the buyer/purchaser, transferee or lessee of the an indirect tax payable by the seller and not by the purchaser of goods. However, being an

goods. properties or services. Once shifted to the buyer/customer as an addition to the cost of

pay in order to obtain the goods or services. goods or services sold, it is no longer a tax but an additional cost which the buyer/customer has to

cannot invoke its tax exemption privilege under Section 30 of the National Internal Revenue Code Thus, the shifting of the VAT to it does not make it the person directly liable and therefore, it

of 1997, as amended, to avoid the passing on or shifting of the VAT.

6.WITHHOLDING TAX

government if it acts as an employer and its employees receive compensation income subject to ST. AUGUSTINES SCHOOLINC. shall be constituted as withholding agent for the

Revenue Regulations No.2-98,as amended. or if it makes income payments to individuals or the withholding tax under Section 79(A),Chapter XIII, Title II of the NIRC, as implemented by

corporations subject to the withholding tax pursuant to Section 57 of the National Internal

amended. Revenue Code of 1997,as amended,and as implemented by Revenue Regulations No.2-98. as

TAXPAYER DUTIES& RESPONSIBILITIES

1The Articles of Incorporation of ST.AUGUSTINES SCHOOLINC.must include the following provisions pursuant to RMO 20-2013 and RMC14-01:

b that the primary purpose for which it was created is one of those enumerated under Sec.30 of a)that the corporation is non-stock,non-profit;

the Tax Code of 1997:

C that no part of the net income shall inure to the benefit of any its members: dthe trustees do not receive compensation or remuneration;and e) in case of dissolution, assets of the corporation shall be transferred to similar institution or to

the government

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

2 ST.AUGUSTINES SCHOOLINC.is likewise required to file on or before the 1Sth day of the

fourth month following the end of the accounting period a Profit and Loss Statement and Balance incurred during the preceding period and a certificate showing that there has not heen any change disposition of income. in its By-laws, Articles of Incorporation,manner of operation and activities as well as sources and Sheet with the Annual Information Return under oath, stating its gross income and expenses

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

4Under Section 235 of the National Internal Revenue Code of 1997,as amended, any provision of existing general and special law to the contrary notwithstanding. the books of accounts and other pertinent records of tax-exempt organization or grantees of tax incentives shall he subject to

4

ST.AUGUSTINE'S SCHOOL,INC. Page 7 of 7 CTE No.309-206 Date issued62-2016

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.

5 Further.it is also required under Section 6(C in relation to Section 237 of the Nationat Internal

invoices for each sale or transfer of merchandise or for services rendered which are not directly Revenue 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)

6 Finallyit 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.