BIR Ruling No. 576-2017

REPUBLIC OF THE PHILIPPINES

BUREAU OF INTERNAL REVENUE DEPARTMLNT OF FINANCE

Quezon City

Section 30 (E) of the NIRC"of 20-2013: RMC No. 051-2014 BIR Ruling No. 466-2014 1997. as amended; RM0 No.

No. 49, Chico St.. Project 2, Quezon City REACH, INC. (RESOURCES EMPLOYMENT AND COMMUNITY HORIZONS, INC.) 12-7-27

Attention: GLORIA P. JIMENEZ,DPA Executive Officer

Gentlemen:

Section 30 (E) of the National Internal Revenue Code of 1997. as amended. which was forwarded to this Office by Revenue Region No. 7, Quezon City, through 4th Indorsement dated February 09, 2016. exemption certificate being enjoyed by non-stock, non-profit corporation or association under (RESOURCES EMPLOYMENT AND COMMUNITY HORIZONS, INC.) for tax This refers to your letter dated October 24, 2013 applying on behalf'of`REACH, INC

of the Philippines; that it is registered with the Securities and Exchange Commission (SH:C) non-stock, non-profit organization duly organized-and existing under the laws of the Republic under Company Registration No. incorporated are: COMMUNITY HORIZONS,INC.) with BIR Taxpaver's Identification No.(T`IN) It is represented that REACH, INC. (RESOURCES EMPLOYMENT AND and Certificate of Registration No. : : and that the purposes' for which the organization was dated May 07,1998, is a

1 To develop disciples of Jesus Christ as whole persons and promote u contextualized wholistic Christian discipleship in the third world:

2 To establish small group Bible studies in homes, offices. schools and communities as the"primary means of bringing people to ('hrist amd training them in Christian discipleship:

3 To encourage growth in the personal disciplines of Bible study, scripture

memory, prayer, fellowship and witnessing:

4 To encourage the establishment of training homes as centers for charucter

development and growth in servant hood:

5. To develop u strong community identity with other members of the family of God cutting across geographical. social, economic and cultural differences:

To make use of appropriate conceptualized material and strategies in population: communicating the gospel of Christ to the greater segment of the

1 Article t1. Amended Articles of Incorporation

X

REACH, INC. (RESOURCES EMPLOYMENT AND COMMUNITY HORIZONS, INC.) 1C-7-2017

7. To utilize techniques of mass media from time to time such as production. promotion and distribution of audio-visual materials. slide presentation, tape or motion pictures, libraries and other projects which will assist in the aims of the organization;

8. To engage in training programs, continuing classes. conferences and seminars"which will continually upgrade the guality of leadership and utilizution of skills in the discipleship community and society in general whether nationul or international:

9. To engage in developmental work designed to upgrade the well-heing of the members of the discipleship community and promote principles of stewurdship und personal and family value system. more consistent with biblicul standards:

10. To establish and maintain an experimental farm and training center of large reservoir of agriculturally-oriented and trained disciples; some of the means of financial and resource development which w'ill utilize

I l. To conduct. undertake and assist in scientific researches and skills of our community and potentially henefit much wider area of society: experimentation in the socio-agro-husiness fields which will utilize the

12. To engage in any and all economic and productive uctivity consistent with such as solar energy. wind and bio-chemical conversion systemst. the aim of the training center farm complex (that is huying. selling. leusing) manufacturing, development utilization, and promotion and sale of equipment and systems for the utilization of alternative sources of energ

13. To structure business entities with the corporute framework of REA(H. that is to acquire. control, manage and supervise the use of the capital umd time to time as is consistent with the aims of the corporation and good business practices: Inc. which will encourage and accommodate any and all of the ahove aims. technical resources, to liguidate, maintain or set free such entities from

14. To designate und channel aid for disaster relief and community development need to the discipleship community and other needy' groups. acting independently or in cooperation with other organizutions andior

government agencies:

15. To develop an indigenous financial base. sufficient to carry out the

purposes of the corporation:

16. To maintain an office support staff to take care of the administrative needs of the orgunization;

1 7. To solicit und/or accept any gifi, grant contributions and endowment plan! bequest or device of any kind"and all real and personal properties necessary. desirable or proper for the corporation to hold. acquire, or administer whether from national or foreign sources: 18. To hold, purchase, acquire, sell. exchange, lease. mortgage or otherwise 'or may be necessary to carry out the purposes and objectives of the deal in real and/or personal property and to invest its funds, money or property in such undertaking, and pursue such activities as may he desired corporation:

REACH, INC. (RESOURCES EMPLOYMENT .AND COMMUNITY HORIZONS, INC.) i; 576-2017 12-7-2017

19. To engage in open collaboration and establish relationships with the

Christian Churches and organizations to the extent possible, this may include but not to be restricted to sending and receiving missionuries: and

20. To do each and everything necessary. appropriate and has heen historically to interact with different peoples at their places of need. using

various means and methods suited to their specific historical circumstances to bring across a single message, that of God reconciling the world to himself through Jesus Christ. It is for this reason that we believe that the

into consideration the social, historical, and culiural context of the peoples task of developing disciples in Christ must follow the same patter, taking

we want to reach.

(NIRC) of 1997, as amended, provides, viz: In reply, piease be informed that Section 30 (E) of the National Internal Revenue Code

by them as such. organizations shall not be taxed under this Title in respect. to income received "Sec. 30. Exempt from Tax on Corporations. - The following

XXX XXX XXX

(E) Non-stock corporation or associution organized and operuted xxr xxx" (Emphasis supplied) exclusivelv for religious. churitable. scientific. athletic. or of any member. organizer. officer or any specific person; xxx cultural purposes. or for the rehabilitation of veterans. no part of its net income or asset shall betong to or inure to the benefit

to the institution's purposes and all its activities conducted not for profit".: trustees. or officers" and that any profit "obtained as an incident to its operations shall. whenever necessary or proper, be used for the furtherance of the purpose or purposes for which the corporation was organized".2 accrues to or benefits any member or specific person, with all the net income or asset devotca "Non-stock" means "no part of its income is distributable as dividends to its members "Non-profit" means that "no net income or asser

not inure to the benefit of any of its trustees, organizers, officers, members or any specific person. The following are considered "inurements" of such nature: entity to qualify as a non-stock and / or non-profit corporation / association / organization exempt from income tax under Section 30 of the NIRC, as amended, its earnings or assets shall Revenue Memorandum Circular (RMC) No. 51-2014 has clarified that in order for an

1. The payment of compensation, salaries. or honorarium to its trustees or organizers:

xxxxXxxXx

(RESOURCES EMPLOYMENT AND COMMUNITY HORIZONS, INC.), it provides that: In Section 7, Article III, of the submitted Amended By-Laws of REACH, INC

Section 7. Compensation -- The BOT may receive reasonable honorarium in the performance of their duties and responsibilities according to the authorized rate subject to availability of funds. xxx xxx xxx. as may be fixed by the body

2 Section 87. Corporation Code 3 CIR vs. St. Luke's Medical Center. Inc.. G.R. Nos. 195909 and 195960 dated 26 September 2012

REACH, INC. (RESOURCES EMPLOYMENT AND COMMUNITY HORIZONS, INC) +576017 12-7m207

operation of a non-stock, non-profit corporation. This act violates the requirement that no part of the net income or assets of the corporation shall inure to the benefit of any individual or specific person. income of"REACH, INC. HORIZONS, INC.) It is a form of inurement which the law prohibits in the organization and The giving of honorarium to the Board of Trustees is considered distribution of the net (RESOURCES EMPLOYMENT AND) COMMUNITY

exemptions are construed strictissimi juris against ihe taxpaver and liberally in favor of the covered by the exemption so claimed.115 (B1R Ruling No. 466-2014 dated November 19, 2014) this reason alone, completely exempt an institution from tax.' taxing authority. A claim of tax exemption must be clearly shown and based on language in law too plain to be mistaken. Otherwise stated, taxation is the rule, exemption is the exception. The burden of proof rests upon the party claiming the exemption to prove that it is in fact Please bear in mind that, "being a non-stock and/or non-profit corporation does not, by Thus, "stututes granting tax

tax on its income as a Section 30 (E) corporation or association is hereby denied as it failed to prove that it is a non-profit corporation or association. Therefore, it shall be subject to thirty percent (30%) corporate income tax pursuant to Section 27 (A) of the National internal EMPLOYMENT AND COMMUNITY HORIZONS,INC.) to be exempted from income Revenue Code of 1997, as amended. In view of the foregoing. the request of REACH, INC. (RESOURCES

Please be guided accordingly.

Very truly yours.

AuoM

K-1-LMAT Commissioner of Intcrnal Revenue. CAESAR R. DULAY If 5`2

COPY FURNISHED:

Attention: Revenue District Office No. 40 -- Cubao, Quzon City REVENUE REGION NO.7 - QuezOn City

5 Quezon City artd The City Treasurer of Quezon City vs. ABS-CBN Broadeasting Corporation [G.R. No. 166408. 6 October 4 CIR vs. St. Luke's Medical Center. Inc. [G.R. No. 195909 & G.R. No. 195960, 26 September 2012]. 20081

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