Clarification on tax exemption of NSSLAs

(Revenue Memorandum Circular 9-2016, Jan 28, 2016)

NSSLAs, as defined under Section 3 of Republic Act (RA) 8367 are non-stock, non-profit corporations engaged in the business of accumulating the savings of its members and using such accumulations for extending credit to them. 

The BIR clarifies that, pursuant to Section 5 of the same law, NSSLAs are only exempted from paying income taxes on income they receive, including interest from bank deposits.  

The same Section also provides that income derived from any of its properties, real or personal, or any activity conducted for profit, regardless of the disposition thereof, is subject to the corresponding internal revenue taxes. Thus, any disposition made by a NSSLA of its properties (real or personal) is subject to the applicable income tax depending on the classification of such properties either capital or ordinary asset.  

Further, NSSLAs shall also be subjected to gross receipts tax as a nonbank financial institution and to documentary stamp tax on loan agreements and mortgages, among others.