Schools

(1) Non-stock, non-profit educational institution

Exemptions:

RPT (constitution)
o Land actually, directly, exclusively used for educational purposes

Income (constitution) (sec. 30 NIRC)

o Revenues derived from assets used actually, directly, exclusively used
for educational purposes (NIRC)
o Income from canteens, bookstores exempt if owned and operated by
school and located within school premises
o Revenue from any activity so long as profits used actually, directly and
exclusively fro educational purposes (constitution)
o Interest income from bank deposits provided income actually, directly,
exclusively used for educational purposes

If income from tuition is invested for an unrelated purpose,

invested income is exempt but the earnings therefrom subject
to income tax
** if non-stock non-profit PRIVATE school engages in a for profit activity, the
profit is tax EXEMPT if the profits are actua lly, directly, and exclusively used
for educational purposes ( constitutionall revenues and assets of non-stock
non-profit educational institutions, used actually, directly and exclusively for
educational purposes, are exempt from taxes and duties)
o

**if ginamit yung profits for an unrelated purpose, income from

unrelated purpose taxed at 10% preferential rate OR 30% of entire
taxable income if gross income from unrelated activities exceeds 50%
of total gross income

(2) Proprietary non-profit educational institution

Exemptions:

RPT (constitution)
o Land actually, directly, exclusively used for educational purposes

Income at preferential rate of 10% of taxable income OR

o 30% of entire taxable income if gross income from unrelated activities
exceeds 50% of total gross income

VAT
o Must be accredited with DECS or CHED
o Income derived from trade, business or other activity still taxable

Bank deposits and FCD exempt from withholding taxes

o Show proof that income is used to fund proposed projects for the
institutions improvement
Hospitals
(1) Non-stock, non-profit, charitable hospitals (charitable institutions)
Exemptions:

RPT (constitution)
o Land actually, directly, exclusively used for charitable purposes

Income (sec 30 NIRC)

o Non-stock
o Organized exclusively for charitable purposes
o Operated exclusively for charitable purposes
o No part of income or asset shall belong to or inure to the benefit of any
member, organizer, officer or any specific person
** if non-stock, non-profit charitable institution engages in a for profit activity,
income from profit activities at preferential rate of 10% of taxable income
(profits must not be distributed) (last par sec. 30) (St. Lukes case)

(2) Proprietary non-profit hospitals

Exemptions:

RPT (constitution)
o Land actually, directly, exclusively used for charitable purposes

Income at preferential rate of 10% of taxable income OR

o 30% of entire taxable income if gross income from unrelated activities
exceeds 50% of total gross income
Religious institutions
Exemptions:
(1) RPT

Land actually, directly, exclusively used for religious purposes

RULES RE income generating activities:

If non-profit, non-stock charitable institution and you conducted for profit activities:
Income from charitable activities= exempt (Based on NIRC)
Income from profit generating activities = 30% (YMCA) or 10% (st. lukes --- provided, you dont
distribute profits)

So if you distribute profits, mawawalan ka ng 10% preferential rate kasi hindi ka na

non-profit hospitalso 30% (?)

Irrelevant if the income generated will be used for charitable purposes. The
moment you engage in income generating activities, you will lose the exemption.
If non-profit, non-stock school and you conducted for profit activities:
Income from tuition fees and schoolr elated shiz = exempt (based on consti and NIRC)
Income from profit generating activities= depends.
If you used the income for educational purposes = still exempt.
If you used the income for an unrelated purpose = taxable at 10% provided profits are
not distributed

If you distribute, mawawalan ka ng preferential rate of 10%. Hindi ka na nonprofit educational institution so 30% (?)

Sale of stock:
shares of domestic corp or foreign corp?

if domestic = always taxable income within the phils regardless of place of sale
o is seller dealer in securities?

If yes= ordinary asset tax the GAIN at 5-32% or 30% corp (even if
listed and traded in s.e.)

If NOT dealer in securities = capital asset.

listed AND traded in stock exchange = exempt CGT but

of 1 % STT of Gross selling price

NOT listed and traded= 5% (not exceed 100k) 10% (in

excess of 10k)

if foreign corp
o is seller taxable without?

If yes= tax the GAIN at 5-32%

If no = not taxable
Sale of Real Property:
Real property in the phils or abroad?

If abroad
o Seller taxable without?

Yes = tax GAIN 5-32%

No= not taxable

If in the Philippines
o Is seller real estate dealer?

Yes= ordinary asset

GAIN 5-32%

Non resident alien NOT ETB 25% final tax on the GAIN

Domestic and foreign corp 30% of the GAIN

Buyer withholds Expanded Withholding Tax of 6%

Not a dealer

Used in T or B = ordinary asset

o GAIN 5-32%
o Non resident alien NOT ETB 25% final tax on the GAIN
o Domestic and foreign corp 30% of the GAIN
Buyer withholds Expanded Withholding Tax of 6%

Not used in T or B = capital asset

o Citizens, aliens individuals, estates and trusts,
domestic corps 6% CGT on gross selling price or FMV at
time of sale whichever is higher
o Resident foreign corp 30% of the GAIN + Creditable
Expanded Withholding Tax
o Non resident foreign corp 30% of GAIN