BIR Ruling No. 294-2016

REPUBLICOF THE PHILIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE

Certificate of Tax Exemption No. 294-2016

CERTIFICATE OF TAX EXEMPTION

issued to

HOLY CHILD'S ACADEMY OF PAGADIAN,INC. San Jose District, Pagadian City. Zamboanga del Sur SEC Company Reg. No. TIN

primary purpose is onc of those enumerated under Section 30(H) of the National Internal revenues or receipts: Revenue Code of 1997, as amended. It is exempt from INCOME TAX only on the following This certifies that the above-named corporation has proven by actual operation that its

1.Tuition and Matriculation Fees; and 2. Donations.

-nothing follows-

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

earlier revoked by this Office for violation of any provisions of applicable rules and regulations of BIR, or the terms and conditions herein set forth. This certification shall be valid for three (3) years from the date of issuance unless

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

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

Issued this day of JUN272016

K-I-NRA Commissioner of Internal Revenue KIM S.JACINTG-HENARES 042369

HOLY CHILD'S ACADEMY OF PAGADIAN,INC CTE No. 2942016

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TERMS AND CONDITIONS

OF THE CERTIFICATE OF TAX 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

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

2) The revenues should be derived pursuant to its purposes as an educational institution and used actually, directly and exclusively for educational purposes;

3) The educational institution shall not distribute dividends;

4) The educational 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 accredited NGO organized for similar purpose or purposes, or to the State for public competent court of justice to another accredited NGO to be used in such manner as in the 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

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

TAX EXEMPTIONS

1) INCOME TAX. HOLY CHILD'S ACADEMY OF PAGADIAN,INC. is exempt from the Exemption. The exemption contemplated herein refers to internal revenue taxes imposed by the National Government on all revenues and assets of non-stock, non-profit educational institutions used actually, directly and exclusively for educational purposes payment of income tax only on revenues and receipts enumerated on the Certificate of Tax

1 Government Accreditation:

Government Recognition (R-IX) No.003.S.2007 Department of Education Recognition No. Certificate of Good Standing issued on May 27, 2016High School Issued on November 9, 2007 (Mention if issued a Certificate of Good Standing) Date Issued/Valid Until First to Fourth Year Course

HOLY CHILD'S ACADEMY OF PAGADIAN,INC CTE No. 294-2016

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Moreover, revenues derived from assets used in the operation of cafeterias/canteens and bookstores located within the premises of HOLY CHILDS ACADEMY OF PAGADIAN INC.are exempt from taxation provided they are owned and operated by it as ancillary activities.

2 FINAL TAX ON INTEREST INCOME. HOLY CHILD'S ACADEMY OF PAGADIAN are exempt from the 20% final tax and 7 1/2% tax on interest income under the expanded foreign currency deposit system imposed under Section 27 (D) (1) of the National Internal Revenue Code of 1997, as amended, subject to compliance with the conditions that as a tax-exempt educational information return and duly audited financial statement together with the following: used actually, directly and exclusively in pursuance of its purpose as an educational institution, institution it shall on an annual basis submit to the Revenue District Office concerned an annual INC.'s interest income from currency bank deposits and yield from deposit substitute instruments

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

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

b Certification of actual utilization of the said income; and

c) Board Resolution by the school administration on proposed projects (i.e., construction and/or improvement of school buildings and facilities, acquisition of equipment, books and 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)2.

3) VALUE ADDED TAX(VAT) ON EDUCATIONAL SERVICES. Pursuant Section 109(H) of the National Internal Revenue Code of 1997,as amended,HOLY CHILD'S ACADEMY OF PAGADIAN, INC's gross receipts from operations as a non-stock, non-profit educational institution are exempt from

Hence, as long as HOLY CHILD'S ACADEMY OF PAGADIAN, INC. 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) DONOR'S TAX. Donations to HOLY CHILD'S ACADEMY OF PAGADIAN, INC. are Internal Revenue Code of 1997, as amended, subject to the condition that not more than thirty percent (30%) of said gift shall be used for administration purposes. exempt from the payment of donor's tax pursuant to Section 101(A(3) and (B(2) of the National

a)Deductibility of Donations to Accredited Non-stock, Non-profit Corporations3/NGOs (RR 13-98).-Donations to accredited non-stock, non-profit corporations/NGOs shall be entitled to the following benefits:

2 Department Order No. 149-95 dated November 24, 1995 amending Department Order No. 137-87

3 -Non-stock. non-profit corporation or organization shall refer to a corporation or association/organization referred to under Section 30 (E) and (G) of the Tax Code created or organized under Philippine laws exclusively for one or more of the following purposes: religious:

2 charitable:

seientific; 4 athletic:

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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. five percent (5% for a corporate donor, of the donor's income derived from trade deductibility in an amount not in excess of ten percent (10%) for an individual donor, and

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:

1 The accredited NGO shall make utilization directly for the active conduct of the Commissioner. 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 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 by a competent court of justice to another aceredited NGO to be used in such manner as in the judgment of said court shall best accomplished the general purpose for which the dissolved organization was organized. public purpose, or purposes, or to the state for public purpose, or would be distributed

(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, HOLY CHILD'S ACADEMY OF PAGADIAN, INC. must first be accredited with the Philippine Council for

6.rehabilitation of veterans; and S. cultural:

no part of the net income or asset of which shall belong to or inure to the benefit of any member. organizer. officer or any specific person. 7.social welfare

Organization as defined under Section 34(H(2(c of the Tax Code organized and operated exclusively for scientific, research, educational, character-building and youth and sports development. health. social welfare. cultural or charitable purposes, or a combination thereof, no part of the net income of which inures to the benefit of any private individual. 4 Non-government Organization (NGO) shall refer to a non-stock, non-profit domestic corporation or

HOLY CHILD'S ACADEMY OF PAGADIAN,INC Page 5 of 7 CTE No.29206 Date issued701

NGO Certification,Inc.(PCNC) which has been duly deignated by the Secretary of Finance as the Accrediting Entity pursuant to Memorandum of Agreement dated January 29. 1998 executed by and between the Secretary of Finance and PCNC's Interim Chairman.

LIABILITY FOR INTERNAL REVENUE TAXES

D)INCOME TAX

income/receipts/revenues not expressly exempted and stated in the Certificate of Tax HOLY CHILD'S ACADEMY OF PAGADIAN,INC.is subject to income tax on all its Exemption.

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 Moreover, it is subject to the corresponding internal revenue taxes imposed under National income should be returned for taxation.

Likewise, interest income from currency bank deposits and yield or any other monetary benefits derived from sources within the Philippines are subject to the twenty percent (20%) final from deposit substitute instruments and from trust funds and similar arrangements, and royalties withholding tax: Provided, however, that interest income derived by it from a depository bank under the expanded foreign currency deposit system shall be subject to seven and one-half percent (7-1/2%) final withholding income tax pursuant to Section 27(D)(1) in relation to Sec. 57(A) both of the National Internal Revenue Code of 1997, as amended.

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

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

the same Code if the gross sales or receipts from such sale of goods and services do not exceed One Million Nine Hundred Nineteen Thousand Five Hundred Pesos (P1,919,500.00) which tax payment may legitimately be passed on to buyers of such goods and services. subject to the 12% VAT imposed under Sections 106 and 108 of the Tax Code of 1997, as amended, or 3% percentage tax imposed under Section 116 in relation to Section 109 (1)(V) of Activities involving sale of goods and services not in connection with its primary purposes are

imposed in Sections 106 to 108 of the same Code. 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)

organization (irrespective of the disposition of its net income and whether or not it sells exclusively to members or their guests), or government entity. 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 The phrase "in the course of trade or business" means the regular conduct or pursuit of a

5 For further inquiries on the accreditation and certification process, please visit PCNC at 6/F. SCC Building. CFA-MA Compound. 4427 Interior Old Sta. Mesa, 1016 Manila Telephone Numbers 715-9594, 715-2756, 782- 1568 and 715-2783 (telefax) website: www.penc.com.ph email them at penc@pldtdsl.net

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Accordinglyif HOLY CHILDS ACADEMY OF PAGADIAN,INC.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 liable for VAT.

4.VAT ON PURCHASES

The tax exemption granted to HOLY CHILDS ACADEMY OF PAGADIAN,INC.as a non- stock, non-profit educational institution under Section 30(H) of the National Internal Revenue the cost of goods or services sold, it is no longer a tax but an additional cost which the buyer/customer has to pay in order to obtain the goods or services. Code of 1997, as amended, covers only income taxes for which it is directly liable. It should be lessee of the goods, properties or services. Once shifted to the buyer/customer as an addition to noted that VAT is an indirect tax payable by the seller and not by the purchaser of goods. However, being an indirect tax, it can be shifted or passed on to the buyer/purchaser, transferee or

cannot invoke its tax exemption privilege under Section 30 of the National Internal Revenue Code of 1997, as amended. to avoid the passing on or shifting of the VAT. Thus, the shifting of the VAT to it does not make it the person directly liable and therefore. it

5.WITHHOLDING TAX

HOLY CHILD'S ACADEMY OF PAGADIAN,INC.shall be constituted as withholding agent for the government if it acts as an employer and its employees receive compensation income subject to the withholding tax under Section 79 (A), Chapter XIII, Title II of the NIRC, as implemented by Revenue Regulations No.2-98.as amended,or if it makes income payments to

individuals or corporations subject to the withholding tax pursuant to Section 57 of the National Internal Revenue Code of 1997, as amended, and as implemented by Revenue Regulations No.2-

98,as amended.

TAXPAYER DUTIES & RESPONSIBILITIES

1) The Articles of Incorporation of HOLY CHILD'S ACADEMY OF PAGADIAN,INC. must

include the following provisions pursuant to RMO 20-2013 and RMC14-01:

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

the Tax Code of 1997; c)that no part of the net income shall inure to the benefit of any its members:

d)the trustees do not receive compensation or remuneration; and

3) in case of dissolution, assets of the corporation shall be transferred to similar institution or to

the government

Any change or amendment in the charter, By-Laws, Articles of Incorporation, manner of activities as well as sources and disposition of income should be communicated immediately to the

Revenue District Officer where it is registered.

2) HOLY CHILDS ACADEMY OF PAGADIAN, INC. is likewise required to file on or before

the 15th day of the fourth month following the end of the accounting period a Profit and Loss

Statement and Balance Sheet with the Annual Information Return under oath, stating its gross

income and expenses incurred during the preceding period and a certificate showing that there has

not been any change in its By-laws, Articles of Incorporation, manner of operation and activities

as well as sources and disposition of income.

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

4) Under 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

it has been granted tax exemptions or tax incentives, and its tax liabilities, if any. 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

5) Further, it is also required under Section 6(C) in relation to Section 237 of the National Internal Revenue Code of 1997, as amended, to issue duly registered receipts or sales or commercial No. [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. (Revenue Memorandum Circular

6) Finally, it 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.