By Prinz Magtulis (The Philippine Star) | Updated June 28, 2016 - 12:00am
Outgoing Internal Revenue commissioner Kim Henares has been hit for her slew of regulations issued weeks before she steps down by June 30. AP/Bullit Marquez, File
MANILA, Philippines - There’s no stopping outgoing Internal Revenue commissioner Kim Henares.
More than a week before she steps down, Henares has institutionalized regulations on tax exemptions for non-stock and non-profit corporations.
Issued June 20, Revenue Memorandum Circular 64-2016 clarified that being registered as a non-profit organization with the Securities and Exchange Commission (SEC) does not guarantee an automatic income tax exemption.
The circular then laid down “characteristics” which would make an organization qualify for tax relief, covering educational institutions, religious and labor organizations, mutual savings associations, agricultural organizations, among others.
“There is nothing new there. That is already being practiced. What we are doing is merely to institutionalize the rules so that everyone knows it,” Henares said in a phone interview.
“It does not mean that you are registered as non-stock, you will be tax-exempt. The SEC registration is different from tax treatment,” Henares added.
Under the circular, non-stock, non-profit companies were reminded that only their income in their operations is tax-exempt, and that assets earned from other means are levied.
It said since granting tax exemption results into revenue losses, it will be up to the corporation to prove it is worthy of such relief.
“It (company) must thus demonstrate that its earnings or assets shall not inure to the benefit of any of its trustees, organizers, officers, members of any specific person,” the circular said.
Henares said the BIR would evaluate companies if they are worthy of exemption during their regular audits.
The outgoing BIR chief has been hit for her slew of regulations issued weeks before she steps down by June 30.
But Henares reiterated she is merely putting in black-and-white what is already being practiced “I am only putting everything on paper,” she said.