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RMC No. 13-2022: Circularizes RA No. 11635, titled “An Act Amending Section 27(B) of the National Internal Revenue Code of 1997, as Amended, and for Other Purposes”

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Summary

RMC No. 13-2022 circularizes Republic Act No. 11635, which amends Section 27(B) of the National Internal Revenue Code of 1997, as amended.

Key points

  1. Regular rate. Nonprofit hospitals and proprietary educational institutions pay a tax of ten percent (10%) on their taxable income, except those covered by Subsection (D).
  2. Reduced rate. From July 1, 2020 until June 30, 2023, the rate is one percent (1%).
  3. Unrelated activity exception. If gross income from unrelated trade, business or other activity exceeds fifty percent (50%) of total gross income from all sources, the tax in Subsection (A) applies to the entire taxable income.
  4. Definitions. Unrelated trade, business or other activity means one not substantially related to the institution’s primary purpose or function. A proprietary educational institution is a private school maintained and administered by private individuals or groups with a permit to operate from DepEd, CHED or TESDA, as the case may be.

Who is affected

  • Nonprofit hospitals
  • Proprietary educational institutions

Deadlines and effectivity

  • One percent (1%) rate: July 1, 2020 until June 30, 2023

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.

Copies of BIR issuances are hosted here for reference. For the official version, check bir.gov.ph. Summaries by Tax Resources PH are not a substitute for the full text or professional advice.