Summary
RMC No. 53-2013 clarifies the taxability of donations and contributions given to homeowners’ associations of subdivisions and villages.
Key points
- General rule. Under RMC No. 9-2013, homeowners’ associations are subject to the internal revenue taxes of the Tax Code of 1997 on income of whatever kind and character.
- Possible exemption. They may be exempt from income tax, VAT and Percentage Tax on association dues and rentals of their properties. This is subject to the conditions in Section 18 of Republic Act No. 9904, as implemented by RMC No. 9-2013.
- Contributions in exchange for goods or services. Contributions given in exchange for goods, services and use of properties are charges for a service, use of property or delivery of an object. They are income of the association subject to income tax under Section 27.
- VAT and Percentage Tax. These fees are received in a commercial or economic activity and are also subject to VAT under Sections 106 and 108. Those exempt from VAT under Section 109(v) (now (w)) pay Percentage Tax.
Who is affected
- Homeowners’ associations of subdivisions and villages
Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.
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