RMC No. 123-2024 — Clarification on the validity of a Certificate of Tax Exemption issued to certain corporations

T

BUREAU OF IN. REPUBLIC OFITHE HLRPINESICATIONS DIVISO DEPARTMEN BUREAUOFINTERNAL REVENI OFNANCELTTZIEI NAL REVENUE

idin U

Bringing in Revenues for Nation-Building REVENUE MEMORANDUM CIRCULAR NO National Offid Quezon UCj 123-20 24 2 1 AdW1.5 2024 EAGONG ILIPINAS

SUBJECT Issued to Certain Corporations Clarification on the Validity of a Certificate of Tax Exemption

TO All Internal Revenue Officers, Employees and Other Concerned

I BACKGROUND

to wit: expressly exempts the following corporations in respect to income received by them as such Section 30 of the National Internal Revenue Code of 1997, as amended, ("Tax Code

(C) A beneficiary society, order or association, operating for the exclusive (A)Labor, agricuitural or horticultural organization not organized principally (B) Mutual savings bank not having a capital stock represented by shares, and for profit; cooperative bank without capital stock organized and operated for mutual benefit of the members such as a fraternal organization operating under the lodge system, or a mutual aid association or a non-stock corporation organized by employees providing for the payment of life, sickness. purposes and without profit;

(D)Cemetery company owned and operated exclusively for the benefit of its (E) Non-stock corporation or association organized and operated exclusively for members; religious, charitable, scientific, athletic, or cultural purposes, or for the accident, or other benefits exclusively to the members of such society, order, or association, or non-stock corporation or their dependents;

(F) Business league, chamber of commerce, or board of trade, not organized for () Farmers' or other mutual typhoon or fire insurance company, mutual ditch (H) A non-stock and non-profit educational institution; (G)Civic league or organization not organized for profit but operated (I) Government educational institution; profit and no part of the net income of which inures to the benefit of any organization of a purely local character, the income of which consists solely of meeting its expenses; and person; private stockholder or individual; exclusively for the promotion of social welfare; or irrigation company, mutual or cooperative telephone company, or like of assessments, dues, and fees collected from members for the sole purpose rehabilitation of veterans, no part of its net income or asset shall belong to or inure to the benefit of any member, organizer, officer or any specific ADMiRUIE NOV 1 5 2024 B F*3 e: O E 3

BIR National Office Bldg., Senator Miriam Defensor-Santiago Avenue, Diliman, Quezon City Trunkline: 8981-7000 ; 8929-7676 Website: www.bir.gov.ph

(K)Farmers", fruit growers', or like association organized an operated as a sales agent for the purpose of marketing the products of its members and turning back to them the proceeds of sales, less the necessary selling expenses on the basis of the quantity of produce furnished by them.

This provision is implemented in Revenue Memorandum Order (RMO) No. 38-2019

the corporation falls within the contemplation of the Tax Code, the said RMO outlines the guidelines in the processinig and issuance of a Certificate of Tax Exemption (CTE) wherein it clarifies the nature, character and tax treatment of such corporations. To ensure that

from the date of its effectivity, unless sooner revoked or cancelled except for Section 30 (H) of AIso, RMO No. 38-2019 states that a CTE shall be valid for a period of three (3) years

the Tax Code. The CTE may be revalidated under the same procedure set forth in the RMO.

issued CTEs mentioned in RMO No. 38-2019. validity period of a CTE considering the implermentation of other laws and revenue issuances. Thus, this Circular is issued to clarify the application of the three (3) year validity period of The Bureau of Internal Revenue (BIR) noticed that there is still confusion as to the

H. CLARIFICATION

provided in RMO No. 38-2019 shall not apply to the CTE of the following corporations: Pursuant to prevailing laws and revenue issuances, the three (3) year validity period

(2) Homeowners' Association as provided under Republic Act (RA) No. 99041 (1) Non-stock and non-profit educational institutions as provided under Section 30 (H) of the Tax Code and RMO No. 044-2016;

(3) Non-stock savings and loan association as provided under RA No. 83672 nd RMC No. 2016. and Revenue Memorandum Circular (RMC) No. 09-2013, as amended; and

otherwise known as Certificate of Qualification, of an employees' retirement benefit plan created under RA No. 49173 and Revenue Regulations (RR) No. 1-68, as amended by RR No. 1-83 Furthermore, the three (3) year validity period shall not apply to the issued CTE, or

inconsistent with the basis for income tax exemption, the CTE shall be subject to revalidation. for valid grounds. If there are material changes in the character, purpose or method of operation of the corporation or in the provisions of the employees' retirement benefit plan which are retirement benefit plan shall remain valid and effective unless recalled or revoked by the BIR Therefore, issued CTEs of the above-enumerated corporations and employees @ ruray gFinternat revenu 11 uc

E

NOV 1 5 2024

3 An Act Providing that Retirement Benefits of Employecs of Private Firms shall not be Subject to Attachment, Levy, Execution, or Any Tax Whatsoever. An Act Providing for a Magna Carta for Homeowners and Homcowners' Associations, and for Other Purposes 2 An Act Providing for the Regulation of the Organization and Operation of Non-Stock Savings and Loan Associ ADVIN UNI

Page 2 of 3

Circular as wide publicity as possible. All revenue officials, employees, and others concemed are hereby enjoined to give this

This Circular takes effect immediately.

HOvM LUMA JR Compassioner of Internal Revenue

KI - CDM

t BUREAUOF TNTFRNALRENENUE RE(OPnS M VNT 5V}SiON

NOV 15 2024

ersrY

Y Admin unit- 1 TIME: ys

Page 3 of 3