Issuance of tax exemption rulings to NSNP educational institutions

(Revenue Memorandum Order No. 44-2016)

This Tax Alert is issued to put in proper context the nature and tax status of non-stock, non-profit educational institutions pursuant to the Constitutional provisions.

The Philippine Constitution provides that all revenues and assets of NSNP educational institutions used actually, directly and exclusively for educational purposes shall be exempt from taxes and duties. This is further reiterated in Section 30 of the NIRC.

There are only two requisites: (a) the school is non-stock and non-profit; and (b) the income is actually, directly and exclusively used for educational purposes.

These new guidelines are issued to ensure the implementation and interpretation of the constitutional exemption in a manner that will not defeat or diminish the intent and language of the constitution. These will be in lieu of the guidelines issued under RMO 20-2013.
Applications for tax exemption shall be filed by the NSNP educational institutions with the Office of the Assistant Commissioner, Legal Service Law division.

NSNP educational institutions who have been issued a certification/ruling after June 30, 2012 need not apply for a new one. Those whose rulings were issued prior to June 30, 2012 shall be required to apply for a new ruling/certificate under these new guidelines.

The following documents shall be required:

a. Original copy of the application letter for issuance of tax exemption ruling;

b. Certified true copy of the Certificate of Good Standing issued by SEC

c. Original copy of the Certification under Oath of the Treasurer as to the amount of income, compensation, salaries or any emoluments paid to its trustees, officers and other executive officers

d. Certified true copy of government permit (CHED, DepEd, TESDA) to operate as an educational institution

e. Original copy of the certificate of utilization of annual revenues

f. Additional information or documents which may be requested by the Bureau

The Certificate of Tax Exemption or Tax Exemption Ruling shall remain valid for an indefinite period, unless recalled for valid grounds.