Monday, November 26, 2012
WITH the issuance of Revenue Memorandum Circular (RMC) No. 65-2012,
the Bureau of Internal Revenue (BIR) states that condominium
corporations are now subject to income tax and value-added tax (VAT) on
association dues, membership fees and other assessments and charges
collected from tenants and members. According to the BIR, these charges
constitute income payments for beneficial services condominium
corporation provides to its members and tenants, which should be subject
to VAT and income tax, including the applicable withholding tax under
Revenue Regulations (RR) 2-1998, as amended.
With this development, the BIR has abandoned its interpretation in previous rulings that assessments and charges collected by condominium corporations are exempt from income tax and VAT since these are merely held in trust to be used solely for administrative expenses in implementing their purpose. Previous rulings have argued that the condominium corporation does not sell, barter, exchange, nor lease any goods or property and neither does it render service for a fee but merely implements the administration of the required services to collect the association dues from the unit owners pursuant to its corporate purposes as “trustee” for the fund.
ENJOY GOOD LIFE + INVESTMENT, CLICK HERE
A similar issuance (RMC 35-2012, August 6, 2012) was earlier issued by the BIR subjecting to VAT and income tax (and consequently to withholding tax) the membership fees and association dues collected by clubs organized and operated exclusively for pleasure, recreation and other non-profit purposes.
(Source: Punongbayan & Araullo)
With this development, the BIR has abandoned its interpretation in previous rulings that assessments and charges collected by condominium corporations are exempt from income tax and VAT since these are merely held in trust to be used solely for administrative expenses in implementing their purpose. Previous rulings have argued that the condominium corporation does not sell, barter, exchange, nor lease any goods or property and neither does it render service for a fee but merely implements the administration of the required services to collect the association dues from the unit owners pursuant to its corporate purposes as “trustee” for the fund.
ENJOY GOOD LIFE + INVESTMENT, CLICK HERE
A similar issuance (RMC 35-2012, August 6, 2012) was earlier issued by the BIR subjecting to VAT and income tax (and consequently to withholding tax) the membership fees and association dues collected by clubs organized and operated exclusively for pleasure, recreation and other non-profit purposes.
(Source: Punongbayan & Araullo)
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