Tax Digest
Volume 9,
Series 53
Reminder for NSNP Educational Institutions

Non-stock, Non-profit (NSNP) Educational Institutions are exempted from taxes and duties from all revenues and assets provided, it is exclusively for educational purposes in accordance with Section 4(3) Article XIV of the 1987 Constitution. Moreover, the circular goes over Department Order (DO) No. 149-95, exempting NSNP educational institutions to 20% and 7.5% final withholding taxes in connection with their interest income provided that they will submit to the depository banks a certificate of income tax exemption or tax ruling confirming their exemption.

Furthermore, the circular reminded the institutions to comply with DO No. 149-95, to submit on an annual basis to the Revenue District Officer (RDO), together with the annual information return and duly audited financial statement, the following:

  1. Certification from their depository banks as to the amount of interest income earned from passive investments not subject to the 20% final withholding tax imposed by Section 24(e) of the Tax Code, as amended;
  2. Certification of actual utilization of the said income; and
  3. Board Resolution by the school administration on proposed projects. (i.e. construction and/or improvement of school building and facilities; acquisition of equipment, books and the like) to be funded out of money deposited in banks or placed in money markets.

Finally, RDO shall conduct an audit of the annual information return filed to determine compliance with the conditions set forth in the certificate of exemption and tax liabilities, if any.

Revenue Memorandum Circular No. 24-2016, February 24, 2016
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