The document discusses the Philippine Tax Code and its provisions regarding tax exemption for certain organizations. It provides details on entities exempted from corporate income tax under Section 30 of the Tax Code such as religious, charitable, scientific, and educational organizations. Donations to some of these entities may be fully or partially deductible. The Implementing Rules and Regulations on Philippine Council for NGO Certification only covers deductibility of donations but not income tax exemption. Certification by the PCC may become a prerequisite for income tax exemption in the future but has not been proposed yet.
The document discusses the Philippine Tax Code and its provisions regarding tax exemption for certain organizations. It provides details on entities exempted from corporate income tax under Section 30 of the Tax Code such as religious, charitable, scientific, and educational organizations. Donations to some of these entities may be fully or partially deductible. The Implementing Rules and Regulations on Philippine Council for NGO Certification only covers deductibility of donations but not income tax exemption. Certification by the PCC may become a prerequisite for income tax exemption in the future but has not been proposed yet.
The document discusses the Philippine Tax Code and its provisions regarding tax exemption for certain organizations. It provides details on entities exempted from corporate income tax under Section 30 of the Tax Code such as religious, charitable, scientific, and educational organizations. Donations to some of these entities may be fully or partially deductible. The Implementing Rules and Regulations on Philippine Council for NGO Certification only covers deductibility of donations but not income tax exemption. Certification by the PCC may become a prerequisite for income tax exemption in the future but has not been proposed yet.
As drafted, the Implementing Rules and Regulations (IRR) on
certifcation by the Philippine Council for !" Certifcation (PCC) co#ers only the deductibility of donations to certifed !"s, as $ell as e%emption from donors ta% of such donations. &he IRR does not pro#ide for the income ta% e%emption of the PCC certifed accredited entities. As a matter of fact, the Philippine &a% Code does not re'uire the ta% e%empt entities enumerated under (ection )* of the &a% Code to secure certifcation from an accreditation body in order that they may 'ualify for income ta% e%emption under (ection )*. It is possible that the +epartment of ,inance and bureau of Internal Re#enue may decide to ma-e PCC certifcation a prere'uisite for income ta% e%emption for some entities. .o$e#er, this matter has not yet been raised. &hus, the income ta% e%emption $ould not be an issue in so far as PCC certifcation is concerned. In any case, (ection )* of the &a% Code pro#ides that /the income of $hate#er -ind and character of the foregoing organi0ations from any of their properties, real or personal, or from any of their acti#ities conducted for proft, regardless of the disposition made of such income1 shall be sub2ect to the corporate income ta%. 3nder this pro#iso, ta% e%empt entities $ould be sub2ect to the )45 corporate income ta% on unrelated and recurring business income. 6. (ection )* of the &a% Code enumerates the entities e%empt from the corporate income ta% as follo$s7 a. 8abor, agricultural or horticultural organi0ations not organi0ed principally for proft7 b. 9utual sa#ings ban- not ha#ing a capital stoc- represented by shares, and cooperati#e ban-s $ithout capital stoc- organi0ed and operated for mutual purposes and $ithout proft: c. A benefciary society, order or association, operating for the e%clusi#e beneft of the members such fraternal organi0ations operating under the lodge system or mutual aid association or non stoc- corporation organi0ed by employees pro#iding for the payment of life, sic-ness, accident, or other benefts e%clusi#ely to the members of such society, order or association or nonstic- corporation on their dependents: d. Cemetery company o$ned and operated for the beneft of its members: e. on;stoc- corporations or associations organi0ed and operated e%clusi#ely for religious, charitable, scientifc, athletic or The Philippine Council for NGO Certification (PCNC) & The Philippine Tax Code cultural purposes or for the rehabilitation of #eterans, no part of $hose net income f. or asset shall belong to or inure to the beneft of any member, organi0er, o<icer or any specifc person: g. =usiness league, chamber of commerce or board of trade, not proft and no part of the net income of $hich inures to the beneft of any pri#ate stoc-holder or indi#idual: h. Ci#ic league or organi0ation not organi0ed for proft but operated e%clusi#ely for the promotion of social $elfare: i. A non;stoc-, non;proft educational institution j. !o#ernment education institution: k. ,armers> or other mutual typhoon or fre insurance company, mutual ditch or irrigation company, mutual or cooperati#e telephone company, or li-e organi0ation of a purely local character, the income of $hich consists solely of assessments, dues and fees collected from the members for the sole purpose of meeting its e%penses: and, l. ,armers>, fruit gro$ers or li-e association organi0ed and operated as sales for the purpose of mar-eting the products of its members and turning bac- to them the proceeds of sales, less the necessary selling e%penses on the basis of the 'uality of produced fnished by them. "f the abo#e list, only donations to the entities under items (e) and (g) and (h) are deductible and or e%empt from donor>s ta% under section)4 (.) and (ection 1*1, respecti#ely, of the &a% Code. 9oreo#er, donations to some of those entities are sub2ect to limited deductibility, i.e. only 1*5 (indi#idual donor) and ?5 (corporate donor) of the ta%able income deri#ed from trade or business as computed $ithout the beneft of the deduction. Tabular Comparative Summary of Tax Exempt Entitie & !onee "ntitution# $ctivity "ncome Tax Exemption %ull !eductibility &imited !eductibility !onorTax Exemption Religious @%empt ot applicable Applicable if accredited non; stoc-, non;proft corporation @%empt Charitable @%empt Applicable if accredited !" Applicable if accredited non; stoc-, non;proft corporation @%empt (cientifc Research (ote for purpose of deductibility, /scientifc1A /reearch1 purposes are defned together) @%empt Applicable if accredited !" Applicable if accredited non; stoc-, non;proft corporation @%empt Athletics Character =uilding Bouth and (ports +e#elopment(ote for purpose of deductibility 1athletic purpose has the same defnition as /character building and youth and sports de#elopment1 @%empt Applicable if accredited !" Applicable if accredited non; stoc-, non;proft corporation @%empt if accredited !" Cultural @%empt Applicable if accredited !" Applicable if accredited non; stoc-, non;proft corporation @%empt Rehabilitation of #eterans @%empt ot Applicable Applicable if accredited non; stoc-, non;proft corporation ot Applicable (ocial Celfare @%empt Applicable if accredited !" Applicable if accredited non; stoc-, non;proft corporation @%empt @ducational @%empt Applicable if accredited !" Applicable if accredited non; stoc-, non;proft corporation @%empt otes7 /on;stoc-, non;proft corporation or organi0ation1 is created or organi0ed under Philippine la$s e%clusi#ely religious, charitable, scientifc, athletic, cultural, rehabilitation of #eterans and social $elfare purposes, no part of the net income or asset of $hich shall belong to or inure to the beneft of any member, organi0er, o<icer or any specifc person. A /non; go#ernment organi0ation (!")1 has the follo$ing characteristics7 1. on; stoc-, non; proft domestic corporation or organi0ation organi0ed and operated e%clusi#ely for scientifc, research, educational, character;building and youth and sports de#elopment, health, social $elfare, cultural or charitable purposes, or a combination thereof : 6. o part of the income of $hich inures to the beneft of any pri#ate indi#idual, the members of the =oard of &rustees of $hich do not recei#e compensation or remuneration: ). 9a-es utili0ation directly for the acti#e conduct of the acti#ities constituting the purpose or function for $hich it is organi0ed and operated not later than the ffteenth (1? th ) day of the third month after the close of the !">s ta%able year in $hich contributions are recei#ed, unless an e%tended period is granted by the (ecretary of ,inance, upon recommendation of the Commissioner of Internal Re#enue: 4. &he le#el of administrati#e e%penses of $hich on an annual basis does not e%ceed thirty percent ()*5) of the total e%penses for the ta%able year: and ?. In the e#ent of dissolution, the assets of $hich shall be distributed to another accredited !" organi0ed for similar purpose, or the state for public purpose or purposes, or $ould be distributed by a competent court of 2ustice to another accredited !" to be used in such manner as in the 2udgement of said court shall best accomplish the general purpose for $hich the dissol#ed organi0ation $as organi0ed. Prepared by 7 A&&B. C"R@8I" C !I(" Corporate (ecretary, PCC