Revenue Memorandum Order (RMO) No. 44-2016 issued on July 26, 2016 prescribes guidelines in the tax exemption rulings to qualified non-stock, non-profit corporations and associations.
Non-stock, non-profit educational institutions are constitutionally exempt from tax on all revenues derived in pursuance of its purpose as an educational institution and used actually, directly and exclusively for educational purposes. In order for the non-stock, non-profit educational institutions to enjoy its tax exemption conferred by the 1987 Constitution, there are two requisites, namely: a) the school must be non-stock and non-profit; and, b) the income is actually, directly and exclusively used for educational purposes. There are no other conditions and limitations.
Documentary requirements are the following:
- Original copy of the application letter for issuance of tax exemption ruling;
- Certified true copy of the Certificate of Good Standing issued by the SEC;
- Original copy of the Certification under Oath of the Treasurer as to the amount of the income, compensation, salaries or any emoluments paid to its trustees, officers and other executive officers;
- Certified true copy of the financial statements of the corporation for the last three years;
- Certified true copy of government recognition/permit/accreditation to operate as an educational institution issued by the Commission on Higher Education (CHED), Department of Education (DepEd), or Technical Education and Skills Development Authority (TESDA): Provided, that if the government recognition/permit/accreditation to operate as an educational institution was issued five (5) years prior to the application for tax exemption, an original copy of a current Certificate of Operation/Good Standing, or other equivalent document issued by the appropriate government agency (i.e., CHED, DepEd, or TESDA) shall be submitted as a proof that the non-stock and non-profit educational institution is operating as such; and
- Original copy of the certificate of utilization of annual revenues and assets by the Treasurer or his equivalent of the non-stock and non-profit educational institution.
In the course of review of the application for tax exemption, the BIR may require additional information or documents as the circumstances may warrant.
Tax exemption rulings or certificates of tax exemption of non-stock and non-profit educational institutions shall remain valid and effective, unless recalled under valid grounds. They are not required to renew or re-validate the tax exemption rulings previously issued to them, but it shall be subject to revocation if there are material changes in the character, purpose or method of operation of the corporation which are inconsistent with the basis for tax exemption.
For purposes of a better system monitoring, non-stock, non-profit educational institutions with tax exemption rulings or certificates of exemption issued prior to June 30, 2012 are required to apply for new tax ruling exemptions.