The bureau has issued the Revenue Memorandum Circular No. 9-2013 to clarify the taxability of association dues, membership fees, and other assessments/charges collected by homeowners' associations from its homeowners-members and other entities.
The circular stated that under Income Tax - Section 18 of R. A No. 9904 which exempts from taxation the association dues and income derived from rental subject to certain conditions is an implied recognition by Congress that such receipts are subject to tax under existing laws. Thus, the amounts paid in as dues or fees by homeowner-members of a homeowners' association form part of the gross income of the latter subject to income tax.
Besides, since a homeowners' association is subject to income tax, income payments made to it are subject to applicable withholding tax under existing regulations.
Moreover, it is also stated in the circular that associations dues, membership fees, and other assessments/charges collected by a homeowners' association are subject to VAT or Percentage Tax (wherever is applicable) since they constitute income payment or compensation for the beneficial services it provides to its homeowner-members.
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