Monday, October 12, 2009

9. EXEMPTION OF NON-STOCK, NON-PROFIT EDUCATIONAL INSTITUTIONS FROM TAXATION

Prohibition against taxation of the revenues and assets of non-stock, non-profit educational institutions

All revenues and assets of non-stock, non-profit educational institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties. Upon the dissolution or cessation of the corporate existence of such institutions, their assets shall be disposed of in the manner provided by law. [Section 4, Article XIV, Constitution]

This exemption from corporate income tax is embodied in Section 30 of the NIRC which includes a non-stock, non-profit educational institution.

Note however the last paragraph of Section 30 which states: “Notwithstanding the provisions in the preceding paragraphs, the income of whatever kind and character of the foregoing organizations from any of their property, real or personal, or from any of their activities conducted for profit, regardless of the disposition made of such income, shall be subject to tax imposed under this Code.”

Posted by at

2 comments:

  1. UnknownSeptember 3, 2013 at 8:12 PM

    This comment has been removed by the author.

    ReplyDelete
  2. UnknownSeptember 3, 2013 at 8:25 PM

    The last paragraph applies only to non stock non profit institution OTHER THAN an educational institution.

    It does not apply to a non stock non profit EDUCATIONAL institution because it runs contrary to the provisions of the Constitution.

    With respect to a non stock non profit EDUCATIONAL institution, the last paragraph of section 30 should be interpreted to mean that in claiming tax exemption, a non stock non profit EDUCATIONAL institution should PRESENT PROOF that its revenues will be ACTUALLY, DIRECTLY and EXCLUSIVELY used for EDUCATIONAL purposes.

    This interpretation would reconcile the conflict between the Constitution and the last paragraph of section 30 of the NIRC with respect to a non stock non profit EDUCATIONAL institution.

    ReplyDelete

Subscribe to: Post Comments (Atom)