Revenue Memorandum Order (RMO) No. 38-2019 was issued by the bureau to clarify the Tax Exemption of Non-Stock, Non-Profit Corporations under Section 30 of the National Internal Revenue Code of 1997, as Amended.
Guidelines in the Processing and Issuance of Certificate of Tax Exemption of Non-Stock, Non-Profit Corporations:
A. Documentary Requirements.
1. Original application letter for issuance of Tax Exemption Ruling. The letter shall cite
the particular paragraph of Section 30 of the NIRC, as amended, under which the
application for exemption/revalidation is being based;
2. Certified true copy of the latest Articles of Incorporation (AOI) and By-Laws issued by
the Securities and Exchange Commission (SEC). The AOI must expressly state the
following provisions, to wit:
i. It is a non-stock, non-profit corporation or association;
ii. No part of the corporation or association's net income shall inure to the benefit of
any private individual;
iii. The trustees of the non-profit corporation or association do not receive any
compensation or remuneration; and
iv. In case of dissolution, its assets shall be distributed to one or more entities formed
for the purpose/purposes similar to its own, or to the Philippine government for
public purpose.
3. Original Certification under Oath by an executive officer of the corporation or
association as to:
(i) full description of its past, present, and proposed activities,
(ii) the
sources and disposition of income,
(iii) detailed description of all revenues which it seeks
to be exempted from income tax, and
(iv) amount of income, compensation, salaries or any
emoluments paid by the corporation or association to its trustees, officers and other
executive officers.
4. Original Certification issued by the RDO where the corporation or association is
registered, indicating the TIN of the corporation, and certifying that said corporation is not
subject of any pending investigation, on-going audit, pending tax assessment,
administrative protest, claim for refund or issuance of tax credit certificate, collection
proceedings, or a judicial appeal; or if there be any, the Original Certification issued by the
RDO on the status thereof; and
5. Certified true copies of the Income Tax Returns or Annual Information Returns and
Financial Statements of the corporation or association for the last three (3) years.
B. Procedure.
a. The request for CTE shall be filed with the RDO where the corporation is
registered. The RDO or his designated Revenue Officer of the Day must preevaluate the corporation's submission using the checklist (Annex "A"). If there is
incomplete submission of the documentary requirements, the applicant shall be
notified thereof and the entire documents shall be returned to the applicant for his
completion.
b. Upon receipt of the complete documentary requirements (docket) in support of the
application, the concerned RDO personnel shall pre-evaluate the same and shall
determine whether or not the applicant qualifies as an exempt corporation or
association under Section 30 of the NIRC, as amended.
i. If based on the pre-evaluation, the RDO is of the position that the
corporation or association is qualified, he shall prepare the CTE (Annex
“B”), together with a memorandum stating the factual and legal basis for
recommending the issuance of the CTE, and endorse the docket to the
Office of the Regional Director. If the Regional Director concurs with the
RDO's recommendation, he shall sign the CTE and issue the same to the
requesting corporation. Otherwise, he shall return the docket to the RDO
together with his findings/instructions.
ii. If the RDO is of the position that the corporation or association does not
qualify, he shall notify in writing the applicant of such findings, stating the
factual and legal bases for the denial. The applicant may appeal the denial
to the Regional Director within thirty (30) days from the date of receipt of
the written notice of denial.
If the application for tax exemption/re-validation is denied, the corporation
or association shall be held liable for income tax and shall be accordingly
assessed for deficiency taxes, inclusive of penalties and interest.
