Do you intend to avail tax exemption? Current tax regulations mandate non-government organizations (NGO) to apply for either tax exemption ruling or revalidation for those with tax ruling previously issued by the Bureau of Internal Revenue (BIR). The BIR accord the tax-exempt status of certain corporations and associations under Section 30 of the Tax Code but it is not automatic and confirmatory ruling or certificate of tax exemptions is required.

However, whether the issue on pork barrel scam influenced this recent issuance of the BIR, corporations or associations duly qualified for tax exemptions must apply for such certificate of tax exemption and revalidation, including those which have been issued tax exemption rulings and certificates prior to June 30, 2012.

Further, tax exemption ruling shall be valid for a period of three (3) years from the date of effectivity, unless sooner revoked or cancelled.

Corporations or associations applying for tax exemption ruling must meet all the following requirements:

1. It must be a non-stock corporation or association organized and operated exclusively for religious, charitable, scientific, athletic, or cultural purposes, or for the rehabilitation of veterans.
2. It should meet Organizational Test, requiring that the corporation or association’s constitutive documents exclusively limit its purposes to one or more of the purposes mentioned in item 1, and Operational Test mandating that the regular activities of the corporation or association be exclusive devoted to the accomplishment of the purposes, otherwise it will be considered “activities conducted for profit’.
3. All the net income or assets of the corporation or association must be devoted to its purpose/s and no part of its net income or asset accrues to or benefits any member or specific person.
4. It must not be a branch of a foreign non-stock, non-profit corporation.

If you need assistance on the application of tax exemption or BIR ruling or application for availment of tax treaty incentives, or any other tax matter, please contact Triple i Consulting.