Most non-stock organizations and nonprofits enjoy tax exemption benefits, and they only have to apply for it once. Since July this year, however, the BIR turned things around: non-stock corporations and nonprofits in the country must now re-apply to revalidate their tax exemption certificates. This includes those organizations that have been issued such certificate prior to June 30, 2012.
And, unless they want their income to be subject to tax, organizations must apply for/revalidate this certificate before December 31, 2013.
You can revalidate/apply for tax exemption if your organization:
Is a non-stock entity organized and operated exclusively for religious, charitable, scientific, athletic, or cultural purposes, or for the rehabilitation of veterans
Meets the Organizational Test and the Operational Test
Devotes all of its net income or assets to its purpose, and not to benefit any member or specific person
Is not a branch of a foreign nonprofit organization.
If your organization’s qualified to apply, you’ll need to submit a bunch of requirements:
1. Original copy of application letter for issuance of Tax Exemption Ruling;
2. Certified true copy of the latest Articles of Incorporation and By-Laws issued by the Securities and Exchange Commission (SEC);
3. Original copy of Certification under Oath by an executive officer of the corporation as to: all previous amendments of the AOI and Bylaws, manner of activities, sources and disposition of income, if any;
4. Original copy of the Certification under Oath by the treasurer of the corporation as to the amount of income, compensation, salaries, etc paid by the corporation to its trustees or officers.
5. Certified true copy of the Certificate of Registration (BIR);
6. Certified true copies of the income tax returns or annual information returns and financial statements of the corporation for the last three years;
7. Original copy of a statement under oath by an executive officer of the organization as to its modus operandi (describing the past, present and proposed activities of the corporation; a narrative description of anticipated receipts and contemplated expenditures, etc);
8. Original copy of certificate of utilization of annual revenues and assets by the treasurer of the organization.
(And, if your organization is an educational institution, you’ll need a certified true copy of government recognition/permit/accreditation issued by the CHED, DepEd, and TESDA. If the accreditation was issued more than 5 years prior to the application for tax exemption, an original copy of a current Certificate of Operation/Good Standing, or other equivalent document shall be submitted as proof that the organization is currently operating as such).
This time, unlike the old system, the new tax exemption certificate is valid for only three (3) years, and must be re-validated again.
Now, this may or may not be influenced by the recent scam, but the Bureau of Internal Revenue is determined to reinforce proper compliance with the law and “minimize tax leakages arising from inaccurate interpretation of relevant administrative issuances.”
Source: BIR RMO No. 20-2013, dated July 22, 2013.