BIR Ruling No. 579-2017

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE

Quezon City

BIR Ruling"No.466-2014 Section 30 (G) of the NIRC of 20-2013: RMC No. 051-14 1997. as amended; RMO No 572-2027

12-7-2017

National Highway, Brgy. Pagdalagan. San Fernando City, La Union TaNIM KaLIKASAN, INC

Attention: MARINA R. RABE-MANUEL

Executive Director

Gentlemen:

which was forwarded to this Office by Revenue Region No. 1, Calasiao. Pangasinan. through 2nd Indorsement dated August 1, 2014. corporation or association organized and operated exclusively for the promotion of social weifare under Section 30 (G) of the National Internal Revenue Code of 1997, as amended KALIKASAN, INC. for tax exemption certificate being enjoyed by non-stock, non-profit This refers to your letter dated January 29, 2014 applying in behalf of TANIM

incorporated is "to operate a public interest organization working for emvironmental rehabilitation, restorution, and protection. July 14, 2009, is a non-stock, non-profit association duly organized and existing under the laws of the Republic of the Philippines; that it is registered with the Securities and Exchange of Incorporation dated March 9, 2009; and that the purpose for wnich the corporation was Commission (SEC) under Company Registration No. No. (TIN) It is represented that TANIM KALIKASAN, INC. with BIR Taxpayer's Identification and Certificate of Registration No. and with SEC Certificate dated

Section 30 (G) of the National Internal Revenue Code of 1997. as amended, provides. viz: 1997. as amended. enumerates the non-stock and/or non-profit corporations/associations/ organizations that are exempt from income tax in respect to income received by them as such In reply, please be informed that Section 30 of the National Internal Revenue Codc of

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

XXX XXX XXX

(G} (ivic leugue or operuted exchusiveh for the promotion of sociul welfure: xxx organication not orgunieed for protit bu

to the institution's purposes and all its activities conducted not for profit" 2 CIR vs. St. Luke's Medical Center. Inc.. (i.R. Nos. 95909 and 195960 dated 26 September 2012 Which the corporation wus orgunized". accrues to or benefits any memher or specific person, with all the net income or asset devoted trustees, or officers" and that "any profit "obtained as an incident to its operations shall whenever necessury or proper. be used for the furtherance of the purpose or purposes for t: Section 87. Corporation Code "Non-stock" means "no part of its incone is distributuble as dividends to its memhers. "Non-profit" means"that "no net income or asse! N

TANIM KALIKASAN, INC. 7-2017 -20

earnings or assets shall 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 National Internal Revenue Code. as amended. its Revenue Memorandum Circular (RMC) No. 51-2014 has clarified that in order for an

The payment of compensation, salaries, or honorarium to its trustees or organizers; xxx.

Board of Trustees received transportation allowance / other benefits amounting to P84,600.00 In the submitted documents of TANIM KALIKASAN, INC., it was disclosed that the

mainly of administrative expenses and not for the exclusive promotion of social welfare or for for the year 20133. Moreover, the expenditures and disbursements of the corporation consist the furtherance of the purpose for which it was incorporated.

distribution of the equity (including the net income) of TANIM KALIKASAN, INC. This is The giving of allowances to the members of the Board of Trustees is considered a

a form of private inurement which the law prohibits in the organization and 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. Thus. TANIM KALIKASAN, INC. cannot be qualified as a non-stock, non-profit corporation or association organized and operated exclusively for the promotion of social welfare under Section 30 (G) of the National Internal Revenue Code of 1997, as amended.

covered by the exemption so claimed.55 (B1R Ruling No. 466-2014 dated November 19, 2014) this reason alone, completely exempt an institution from tax.4 Thus, "statutes granting_ tax exemptions are construed strictissimi juris against ihe taxpayer and liberally in favor of the 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, "heing a non-stock and/or non-profit corporation does not. by

treated as an ordinary corporation subject to thirty percent (30%) income tax rate pursuant to Section 27 (A) and other internal revenue taxes imposed by the National Internal Revenue Code of 1997. as amended. prove that it is a non-profit corporation. Therefore, TANIM KALIKASAN, INC. shall be from income tax on its income as a Section 30 (G) corporation is hereby denied as it failed to In view of the foregoing, the request of TANIM KALIKASAN, INC. to be exempted

Please be guided accordingly.

Very truly yours.

aa

T K-I-LMAT Commissioner of In ernal Reyenuc CAESAR R. DULAY 011514

COPY FURNISHED:

REVENUE REGION NO. 1 - Calasiao, Pangasinan Attention: Revenue District No. 3 -- San Fernando City, La Union

: Certification under (Oath by Maria Cienernsa Mislang, the Corporate Treasurer +CIR vs. St. Luke's Medicat Center., Inc. [G.R. No. 195909 & G.R. No. 195960, 26 September 2012]. % Quezon City and The City Treasurer of Quezon City vs. ABS-CBN Broadcasting Corporation [Ki.R. No 16648. 6 ()ctober 2008