Revenue Regulations 2-40

SECTION 184.Corporation returns. Corporations are required to make returns of income in

duplicate, regardless of the amount of their net income.
A corporation claiming exemption from tax and from the filing of returns must establish its right to
exemption in accordance with the procedure set forth in Section 24 of these regulations, otherwise it will
be amenable to the penalties for failure to file returns. In the case of ordinary corporations, partnerships,
and joint accounts (cuentas en participacion), the return shall be on the form prescribed for corporations
(B.I.R Form No. 17.02), and the returns of insurance companies, on the prescribed form (B.I.R. Form No.
17.03). A corporation having an existence during any portion of a taxable year is required to make a
return. A corporation which has received a charter, but has never perfected its organization, and which has
transacted no business and had no income from any source, may upon presentation of the facts to the
Commissioner of Internal Revenue be relieved from the necessity of making a return so long as it remains
in an unorganized condition. In the absence of a proper showing to the Commissioner of Internal Revenue
such corporation must file the necessary return.
A corporation desiring to change its accounting period from calendar year to fiscal year must comply with
the procedure set forth in Section 172 of these regulations relative to the change in accounting period of
corporations.
SECTION 24. Proof of exemption. In order to establish its exemption, and thus be relieved of the
duty of filing returns of income and paying the tax, it is necessary that every organization claiming
exemption file an affidavit with the Commissioner of Internal Revenue, showing the character of the
organization, the purpose for which it was organized, its actual activities, the sources of its income and its
disposition, whether or not any of its income is credited to surplus or inures or may inure to the benefit of
any private shareholder or individual, and in general, all facts relating to its operations which affect its
right to exemption. To such affidavit should be attached a copy of the charter or articles of incorporation,
the by-laws of the organization, and the latest financial statement showing the assets, liabilities, receipts,
and disbursement of the organization.
Upon receipt of the affidavit and other papers by the Commissioner of Internal Revenue, the organization
will be informed whether or not it is exempt. When an organization has established its right to exemption,
it need not thereafter make and file a return of income as required under Section 46 of the Tax Code.
However, the organization should file on or before April 15 of each year, an annual information return
under oath, stating its gross income and expenses incurred during the preceding year, and a certificate
showing that there has not been any substantial change in its By- Laws, Articles of Incorporation, manner
of operation and activities as well as sources and disposition of income. (As amended by Revenue
Regulations No. 7-64, approved November 25, 1964.)