BIR Ruling No. 578-2017

REPUBLIC OF THE PHILIPPINES

t BUREAU OF INTERNAL REVENUE DEPARTMENT OF FINANCE Quezon City Section 30 (E) of the National "BIR Ruling No. 001"-2017: 1997. as amended BIR Ruling No. 444-2014: Interna! Revenue Code of 12-7-017 578--2017

GOODNEWS EKKLESIA MINISTRIES (PHILIPPINES), INC. 24, Tacay Road, Guisad Valley, Baguio City 2600

Attention: REV. EDWARD.G.EUGENIO Senior Pastor and CEO

Gentlemen:

Revenuc Rcgion No. 2, Baguio City. through 1st Indorsement dated October 01, 2015. requesting on bcha{f of GOODNEWS EKKLESIA MINISTRIES (PHILIPPINES), INC. for the issuance of a certificate of tax exemption enjoyed by non-stock. non-profit corporation or association pursuant to Section 30 (E) of the National Internal Revenue Code (NIRC) of 1997, as amended. This refers to your letter dated May 20, 2015. as indorsed by the Regional Director.

it is registered with the Securities and Exchange Commission (SEC) under Company and that the purpose tor whicn the association was incorporated is to udninister its affairs. properties. and temporalities. INC. with BIR Taxpayer's Identification No. (TIN) Registration No. association duly organized and existing under the laws of the Republic of the Philippines: that Registration No. It is rcprescnted that GOODNEWS EKKLESIA MINISTRIES (PHILIPPINES) and with SEC Certificate of Incorporation dated May 08. 2015: dated May 20. 2015, is a non-stock. non-profit and Certificate of

(PHILIPPINES), INC. has to prove by actual operation for at least three (3) years that it is really an association exempt from income tax under Section 30 of the National Internal Revenue Code of 1997, as amended. (BIR Ruling No. 001-2017 dated January 05, 2017) Certificate of In reply. please be informed that this Office cannot as yet issue the requested Tax Exemption because GOODNEWS EKKLESIA MINISTRIES

the fifteenth (15t) day of the fourth (4th) month following the end of its taxable year as required during the period. The letter of exemption shall thereafter be issued depending upon the result of our investigation. can file the necessary annual information return instead of an income tax return on or before under Section 24 of Revenue Regulations No. 2-40 dated February 10. 1940. Based on such information return, we shall conduct the necessary investigation on the activities undertaken In the meantime, GOODNEWS EKKLESIA MINISTRIES (PHILIPPINES), INC.

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

: Collector vs. Sinco, G.R. L-9276 dated October 23. 1956

$-201 GOODNEY'S EKKLESIA MINISTRIES (PHILIPPINES), INC 127-017

benefits from deposit substitute instruments and from trust funds and similar arrangements. and Likewise. interest income from currency bank deposits and yield or any other monetary

royalties derived from sources within the Philippines are subject to the twenty percent (20%)

bank under the expanded foreign currency deposit system shall be subject to 7-1/2% finai final withholding tax: provided, however. that interest income derived by it from a depository withholding tax pursuant to Section 27 (D) (i), in relation to Section 57 (A), both of the National internal Revenue Code of 1997, as amended. (BIR Ruling No. 444-2014 dated October 30, 2014)

as an employer and its employee receives compensation income subject to the withholding tax (PHILIPPINES), INC. shall be constituted as withholding agent of the government if it acts A!so, it shou[d be understood that GOODNEWS EKKLESIA MINISTRIES

under Section 79 (A), Chapter XII, Title II of the Nationai Internai 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. 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. Moreover, under Section 235 of the National Internal Revenue Code of 1997. as

Pesos (PhP500.00) as prescribed in Section 236 (B) of the National internal Revenue Code of Furthermore, it is subject to the payment of the annuai registration fee of Five Hundred

to Section 237 of the same Code (Revenue Memorandum Circular (RMC) No. 76-2003). 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 1997, as amended. It is also required to issue duly registered receipts or sales or commercial

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, "SEC. 105. Persons Liable. - Any person who, in the course of trade or 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.

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

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engaged in the sale of goods or services in the course of a business pursuit. including transactions incidental thereto, its revenues derived therefrom shall be subject to the tweive percent (12%) VAT. in case the gross receipts from such sales exceed One Million Nine Hundred Nineteen Thousand Five Hundred Pesos (P1.919,500.00), or to the three percent (3%) According|y, if GOODNEWS EKKLESIA MINISTRIES (PHILIPPINES),INC. is

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percentage tax, if gross receipts do not exceed One Million Nine Hundred Nineteen Thousand Five Hundred Pesos (P1,919'500.00).

Notwithstanding that it is a non-stock, non-profit corporation. its purchase ot goods or 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.

It must be noted that VAT is an indirect tax payable by the seller and not by the

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

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

Finally, for purposes nf Securine Certificate of Tax Exemption after the three (3)-year period, GOODNEWS EKKLESIA MINISTRIES (PHILIPPINES), INC. is required to submit the following documents pursuant to Revenue Memorandum Order (RMO) No. 20-2013 dated July 22, 2013:

A. Original copy of application letter for issuance of Tax Exemption Ruling. is being based; The letter shall cite the particular paragraph of Section 30 of the NIRC of 1997, as amended. under which the application for exemption / revalidation

B. SEC' Certified true copy of its Certificate of Incorporation:

C. SEC' Certified true copy of its Articles of Incorporation or latest Amended the following provisions: Articles of Incorporation which must specifically include and clearly state

I. That the association is non-stock, non-profit.

2. That the primary purpose for which the association was creuted is one of those enumerated under Sec. 30 of the National Internul Revenue Code of 1997, as amended:

3 That no part of the net income of the association shall inure to the benefit of any its members or private individual:

4. That the trustees of the non-profit association do not receive any compensation: and

5. In cuse of dissolution, its assets shall be distributed to one or more entities formed for the purpose / purposes similar to its own. or to thePhilippine government Memorandum Circutar No. 51-2014): for publicpurpose(Revenue

D. SEC' ('ertified true copy of its By-Laws or latest Amended By-Laws: E. Original copy of a Certification under Oath by an executive officer of thc association as to:

1. all previous amendments ! changes in the Articles of Incorporation Certification shall state this fact); und By-luws: (If there are no amendments / changes, the

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GOODNEWS EKKLESIA MINISTRIES (PHILIPPINES),INC 578-2017 12-7-3017

2. manner of activities; and

3. the sources umd disposition of income. if any, of the subject association:

F. Certified true copy of its BIR Certificate of Registration: G. Originul copy of a Certification under Oath by the treasurer of the executive officers: association as to the amount of income, compensation. salaries or any emoluments paid by the association to its trustees. officers and other

H. Original copy of a Certification issued by the Revenue District Office assessment. administrative protest. claim for refund or issuance of tax credii certificate. collection proceedings, or a judicial appeal; or if there be any (RDO) where the association is registered that the association is not the subject of any pending investigation, on-going audit, pending tax the original copy of a Certification issued by the RDO on the status thereof:

Certified true copies of its Income Tax Returns or Annual Information Returns and Financiai Statements for the last three (3) years of operation: and

J. Original copy of a Statement under Oath by an executive officer of the association as to its modus operandi which shall include:

I. A full description of the past, present, and proposed activities of the association;

2. A nurrative description of anticipated receipts and contemplated expenditures: and

3. A detailed description of all revenues which it seeks to be exempled statement or application shall be subject to income tax. from income tax. All other revenues which are not included in the

if upon investigation. it will be ascertained 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.

COPY FURNISHED: K-I-EMAT Commissioner of Internal Revenue CAESAR R. DULAY :011516

Attention: Revenue District Office No. 8 -- Baguio City REVENUE REGION NO. 2 -- Baguio City

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