BIR Ruling No. 551-2017

REPUBLIC OF THE PHILIPPINES

BUREAU OF INTERNAL REVENUE DEPARTMENT OF FINANCE

Quezon City

RMC No. 9-2013: R.A. No. 9904: R.A. No. 8424:

BIR Ruling No. 399-2013:

0 Date 2217

Bacoor. Cavite 4102 AVIDA SETTINGS CAVITE HOMEOWNERS' ASSOCIATION INC Paiiparan Road, Molino IV

Attention: ENGR. FROLAN B. CARANDANG Property Manager

Gentlemen:

that the AVIDA SETTINGS CAVITE HOMEOWNERS' ASSOCIATION INC. is entitled to exemption under Republic Act No. 9904. This refers to your letter dated December 15, 2013 requesting for a confirmatory ruling

Documents submitted disclosed that AVIDA SETTINGS CAVITE

the City Mayor of the City of Bacoor has issued a Certification in favor of AVIDA SETTINGS Housing and Land Use Regulatory Board under Registration No. CAVITE HOMEOWNERS' ASSOCIATION INC. stating that: HOMEOWNERS' ASSOCIATION INC., with Taxpayers Identification No. is a non-stock and non-profit residential homeowners association duly registered with the and that the Office of

"is providing basic community services as defined under Section 3(d) tights; imaintenance, repairs and cleaning of streets; garbage collection and disposal; and other similar services and facilities. of R.A. No. 9904 such as, but not limit to: security, street and vicinity

resources of the Municipality of Molino IV Bacoor Cavite." Association are not within the budget or not covered by the financial This is to further certify that these services being provided by the

AVIDA SETTINGS CAVITE HOMEOWNERS' ASSOCIATION INC. bases its request for exemption from value-added tax on Section 18 of R.A. No. 9904, which provides:

associations shall complement, support and strengthen LGUs in government policies, programs, ordinances, and rules. providing vital services to their members and help implement local "SECTION 18. Relationship with LGUs. Homeowners'

residents of the subdivisions/villages and their environs. furtherance of their common goals and activities for the benefit of the Associations are encouraged to actively cooperate with LGUs in

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AVIDA SETTINGS CAVITE HOMEOWNERS: ASSOCIATION INC 11-74-017

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In recognition of the associations' efforts_to assist the LGUs in income and dues shall be used for the cleantiness, safety, security ang other basic services needed.by.. the members. including the maintenance_of the _facilities of their..respective subdivisions .or associations shall endeavor to.tap the means to provide for the same. from rentals of their facilities shall be tax-exempt: Provided, That such villages. xxx providing such basic servic Where the LGUs tack resources to_provide for basic services, the association dues and income derived

homeowners' associations which may be exempted under Section 18 of RA No. 9904. The Cabanatuan No. 399-2013 dated November 7. 2013) HOMEOWNERS' ASSOCIATION INC. does not fali within the purview of those requisite qualification that the city or municipality concerned lacks resources to provide for basic services being absent from the Certification issued by Office of the Mayor of the City of Bacoor, your request cannot be granted for lack of factual and legal basis. (BIR Ruling f In reply thereto, we regret to inform you that AVIDA SETTINGS CAVITE

INC. shall be subject to thc applicable internal revenue taxes on its incone from association dues, rentals of their facilities. trade, business and other activities. Specifically: Consequently, AVIDA SETTINGS CAVITE HOMEOWNERS' ASSOCIATION

Income Taxes

taxation. L.ikewise, interest income from currency bank deposits and yield or any other National Internal Revenue Code of 1997 on its income derived from association dues. rentals of their facilities. trade, business and other activities, which income should be returned for monetary benefit from deposit substitute instruments and from trust funds and similar It shall be subiect to the corresponding internal revenue taxes imposed under the

Code of 1997. Moreover, it is required to file on or before April 15 of each year a profit and loss statement and balance sheet with the annual information return under oath. stating its gross any change in its By-Laws, Articles of Incorporation, manner of operation and activities as well as resources and disposition of income. arrangements, and royalties derived from sources within the Philippines are subject to the 20% final withholding tax; provided, however, that interest income derived from it from a depository bank under the expanded foreign currency deposit system shall be subject to 7 1/2% final withholding tax pursuant to Section 27 (D) (1) in relation to Section 57 (A), both of the Tax income and expenses incurred during the year and a certificate showing that there has not been

Value-Added Tax or Percentage Tax

Pesos (P1,919.500.00). INC.'s gross receipts from operations derived from association dues, rentals of their facilities. relation to Section 109(W) of the same Code if the gross sales or receipts from such sale of trade. business and other activities shall be subject to the 12% VAT imposed under Scctions 108 of the Tax Code of 1997, as amended, which tax payment may legitimately be passed on to buyers of such goods and services: or 3% percentage tax imposed under Section 116 in goods and services do not exceed One Milion Nine Hundred Nineteen Thousand Five Hundred Likewise. AVIDA SETTINGS CAVITE HOMEOWNERS' ASSOCIATION

: 551:017 11-24-2017 AVIDA SETTINGS CAVITE HOMEOWNERS' ASSOCIATION INC. Page 3 of 3

it should be understood that AVIDA SETTINGS CAVITE HOMEOWNERS ASSOCIATION INC. shall be constituted as withhoiding agent of the government if it acts as an employer and its employees receive compensation income subject to the withholding lax under Section 57 of the Tax Code of 1997, as amended.

Finally, AVIDA SETTINGS CAVITE HOMEOWNERS' ASSOCIATION INC. is also subject to the payment of the annual registration fee of PhP500.00 as prescribed in Section 236 (B) of the 'Tax Code of 1997, as amended. It is aiso required under Section 6 (C) in relation to Section 237 of the same Code to issue duly registered receipts.

This ruling is being issued on the basis of the foregoing facts as represented. However. if upon investigation. il will be disclosed that the facts are different. then this ruling shall be considered null and void.

Very truly yours.

Commissioner of Internal Revenue CAESAR R. DULAY 011368

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