Tuesday, November 26, 2019

Guidelines in the Processing and Issuance of Certificate of Tax Exemption of Non-Stock, Non-Profit Corporations

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.



Monday, November 25, 2019

Terminating the Submission of Semestral List of Regular Suppliers (SRS)

Due to the conflicts of the policy of ease of doing business, the submission of Semestral List Regular Suppliers (SRS) shall no longer be required or terminated as mentioned in Revenue Memorandum Circular (RMC) No. 122-2019.

The Circular was issued to make clarification of the Regulations issued. Under, Revenue Regulations (RR) No. 11-2018, the withholding agents liable to deduct the 1% and 2% CWT rates are now identified as top withholding agent (TWAs). The TWAs include the existing top 20,000 private corporations, top 5,000 individual taxpayers. TAMP, and medium taxpayers. As the submission SRS was no longer mentioned in the said regulations and this requirement cannot be applied to TAMP and medium taxpayers without an express provisions prescribing their compliance, this requirement is deemed to have been abandoned by operation of law.