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Taxes and Exemptions

TAX exempt corporations which are all found under the Section 30 of the 1997 National Internal Revenue Code, as amended, are exempted from the income tax, except of course for those whose income was earned from activities conducted for mainly profit. However, the tax exemption granted under the law is not automatic and not absolute as well. For you to be able to to avail tax exempt status, non-stock, and non-profit organizations are required to secure confirmatory rulings or certificates of tax exemption from the Bureau of Internal Revenue or also known as the BIR. The tax exemption privileges that these organizations have are not absolute since it does not exactly cover all types of income and activities.

To be able to properly implement the tax exemption of non-stock, nonprofit corporations, the BIR recently issued Revenue Memorandum Order (RMO) No. 20-2013. This is what prescribes the policies and guidelines for the applications for your tax exemptions, re validation of your tax exemption certificates and application for confirmatory BIR rulings. RMO No. 20-2013 lists a series of documentary requirements as well which is to be submitted by qualified non-stock, non-profit corporations. This is don together with their respective applications for tax exemption or re validation with the Revenue District Office where they are supposedly registered. Furthermore, the RMO is what provides the following causes of revocation of the tax exemption certificate or ruling. First if there are material changes in the character, purpose, or method of the operation of the corporation or any association which are inconsistent with the basis for income tax exemption confirmed in the tax exemption ruling. Next is the Non-renewal and non-re validation of any of your tax exemption certificates. Lastly is if the corporation, which has supposedly been given a tax exemption ruling fails to file an annual information return. The tax exemption rulings or certificates which are provided prior to June 30, 2012 shall only be valid until Dec. 31, 2013 and this is pursuant to the new rules of the RMO. As for those issued after June 30, 2012, the certificate shall continue to be valid but only for the next three years from issuance date. This is only unless you sooner revoked or cancelled it.

 

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