BIR appeals CTA ruling on condo fees’ tax exemption

By , on June 28, 2014


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MANILA — The Bureau of Internal Revenue has appealed the tax-exemption ruling by the Court of Tax Appeals (CTA) on condominium dues, membership fees and other charges.

The tax exemption leaves the condominium fees free of income and withholding tax.

“The decision is a decision of a division of the CTA and which will be appealed by the BIR to the Court en banc by way of a motion for reconsideration,” the BIR said.

As a response to the case filed by Officemetro Philippines (formerly Regus Centres Inc.), which contests the deficiency expanded withholding tax assessed by the BIR, the CTA ruled that the condominium fees be exempt from taxes.

Officemetro alleged in its petition that a portion of the rentals were payments of condominium dues and, therefore do not form part of the taxable income of the company and should not be subject to withholding tax.

Agreeing to the Officemetro’s contention, the CTA said that association dues, membership fees and other fees collected by the condominium should not be included in the company’s gross income and are therefore, exempt from income and withholding tax.

The BIR however is contesting that the ruling did not dealt with the Value-added tax  (VAT) issue.

BIR Commissioner Kim Henares said that said the ruling did not take into consideration the validity of the BIR’s Revenue Memorandum Circular 065-2012, which subjected association dues, membership fees and other charges paid by unit owners and beneficial users to income tax, withholding tax and 12-percent VAT.

“Therefore, RMC 065-2012 is the prevailing rule today and all  concerned taxpayers are required to comply with the provisions of RMC 065-2012,” the BIR said.

“The decision is a decision of a division of the CTA and which will be appealed by the BIR to the Court en banc by way of a motion for reconsideration,” the BIR added.