BIR Ruling No. 271-2016

BUREAU OFINTERNALREVENUE REPUBLICOF THE PHILIPPINES DEPARTMENT OF FINANCE

Quezon City

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

BIR Ruling No.399-2013

#271-2016 Date 622-2016

Bayani Road.Fort BonifacioTaguig City ASSOCIATION (PHASE S),INC. AFP OFFICERS VILLAGE HOMEOWNERS

AttentionCAPT.PROCESO L.MALIGALIG.PN(Ret) Chairmar

Gentlemen:

and other assessments/charges collected by Homeowners' Associations. Homeowners and Homeowners' Associations', as eunciated in Revenue Memorandum Circular No. 9-2013 which clarifies the taxability of association dues,membership fees. (PHASE 5), INC. is entitled to emption from value-added tax as provided for in Section ruling that the AFP OFFICERS VILLACE HOMEOWNERS ASSOCIATION 30(C) of the National Internal Reveaue Code of 1997. as amended (Tax Code); and. alternatively, under Republic Act No.9904 otherwise known as the "Magna Carta for This refers to your letter dated December 27. 2013 requesting for a confirmatory

residential homeowrers association duly regisierea with the Housing and Land Use Administrator of Taguig City City has issued a Certification in favor of AFP OFFICERS VILLAGE HOMEOWNERSASSOCIATION(PHASE 5). INC.stating that: HOMEOWNERS ASSOCIATION (PHASE 5),INC., is a non-stock and non-profit Regulatory Board uncer Keg suation No. Documentssubmitteddisclosed thatAFPOFFICERSVILLAGE and that tie Office of the City

ASSOCIATION INC.AFPOVA).atomeownersasccciation This is to certify thar AFP OFFICERS VILIAGE

duly organized and existing under the laws of the Repablic of the Philippines with offices at AFPOVAI BidgBayani Radort

provides and fu.dst.ie basic services for its horeownerynembers. Bonifacir Tagn Ch and vitr th jtrediction o this tice

s ich s bt my limied to security. street lghting maistenance repairs and cleaning of streets. repair and maintenance of drainages.and maintenance and repair ofcommunity tacilties.

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Section 3d of Republic Act No.9904.otherwisc known as Magna Carta for Homeowners and Homcowners' Association Said basic community services fall within the purview of

for said services. The City Government cannot.at this time,provide funds

may serve. This certification is issued for whatever legal purpose it

INC.bases its request for exemption on Section 30(C).which provides: AFPOFFICERS VILLAGE HOMEOWNERSASSOCIATION(PHASE 5)

following organizations shall not be taxed under thi Title is respeo to income received by them as such "Sec.30.Exenpt from Tax on Corporations.---The

XXX XXX XXX

accident, or othar benefits exclusivey to the menbers of employees providing fer the payneat of life. sickness. or their dependents;xxxxxx such society.order,or association,cr non-stock corporation the excusive benenit ot the menbers such as a fiaenat organization operating under the lodee sysren. or amutual aid association or a non-stock corporation organized by (C)A beneficiary society.order or association.operating for

Alternatively. AFP OFNICERS VILLAGF HOMEOWNERS ASSOCIATION(PHASE s)INCbasesits cxemrnon fromale-acced tax on Section 18 of R.A.No.9904,wnich povides

SECTION 18.ReloaonpwLU.-Foocowners assoviations shall complement, support an strengthen LGUs in providing vital services t thcir menbers anc help inolenent local governme poticies.progrars.ortinevees.andr:les

Asaceiationsare enccuraged to actively cooperate with LGUs

in furtherance of their common goals and activities for the benefit

of the residerts of the sutdvisions/villages ard their emvirors

Where the LGUslockresources toprevide for basic sarvices the assoc ntions shail erdeavor tct Cienenrs to prouuefohe same.Inrecogaition of the associotionseffortsto assist the LOUs

inproviding sueh basic serviccs.associationdues_and_income

derivea_from.remals_or_tner_iacnws.snai_be.rax-exempe

Provided. That_sucnncome_and dues shall.beusen.for the

cieanliness,saiety.securnv andcthex.basic servicesnceded by the

memcersincicoing.the.maintenane.o.the.facilides.or.their

respectve subdivistons.or.villages.xxx

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INC.. The association also does not fall within the purview of those homeowners basis.(BIR Ruling No.399-2013 dated Novemier 7,2013) basic services being absent from the Certification issued by the Office of the City aPply toAFPOFFICERSVILLAGE HOMEOWNERSASSOCIATION(PHASE5 associations which may be exempted under Section 18 of RA No.9904.The requisite qualification that the city or municipalitv concerned lacks resources to provide for Administrator of Taguig Cityyour request cannot be granted for iack of factual and legal provides for an enumeration of corporation which are cxempt from income tax does not In reply thereto,we regret to inform you that Section 30 of the Tax Code, which

taxes on its income fiom association dues, rentais of their faciities, trade, business and other activities.Specifically ASSOCIATION PHASE S),INC.shall be subject to the apphcable internal revenue Consequently. AFP OFFICERS VILLAGE HOMEOWNERS

Income Taxes

income. certificate showing that there has not been any change in its By-Laws, Articles of Incorporation.manner of operaton and activities as wel as resourees and disposition of of each year a profi and loss statenert and oalance shcet with the annual information return under oath. stating its gross income and exuenses incurred during the year and a National Internal Revenue Code of 1997 on its incoine derived from association dues. rentals of their facilities, trade, business and other activities, which income shouid be to the 20% final withhoiding tax: provided, however, that interest income derived from it returned for taxation. Likewise. interest income from curency bank deposits and yield or any other monetary teneft from deposit substitute instruments aod frem trust funds and similar arrangements.ang royaities derived from sources within the Philippines are subject 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 theTax Code of 1997.Moreover.it is required to fflc on or before April15 It shall be subicet to the corresponding internal revenue taxes imposed under the

Value-Added Tax or Rercentege Tux

imposed under Sections 1 08 of the Tax Code of 1991, as amendea.which tax payment may imposed under Secion 116 in relation to Secton109(W) of thessme Cede if the gross of their facilities,trade.ousiress and other activities shal be suoject w the 12% VAT legitimately be passed on to buyers of such goods ans services or 3% percentage tax sales or receipts from such sale of gocds and servieas do not exeed One Million Nine PHASE S),INC.'s gross receipts from operations derived ftom association dues,rentals LIKeWISe, AFP OFFICERS VILLAGE HOMEOWNERS ASSOCIATION

Hundred Nineteen Thousand Five Hundred Pesos (P1.919.500.00)

It should be understood that AFP OFFICERS VILLAGE HOMEOWNERS ASSOCIATION (PHASE ,fG shal ke constiuted as wthholding agent of the

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government if it acts as an employer and its emplovees receive compensation income subject to the withholding tax under Section 57 of th Tax Code ofT997.as amended

Finally.AFP OFFICERS VILLAGE HOMEOWNERS ASSOCIATION PHASE5,INC.is aiso subject to the payment of the annualregistration fee of PhP500.00 as prescribed in Section 236(Bof the Tax Code of 1907.as amended.it is also required

under Section 6(C) in relation to Section 237 of th same Code to issue duly registered

receipts.

This ruling is being issued on the basis of the foregoing facts as represented However if upon invesigaion it will be disclosed that he fact ate different.then this ruling shall be constdered nuland voia

very guy yos

Commissioner of Internal Revenue IMS.JACTO-HENARES

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JUN 2 0 2016

KI-nra