Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 305)
The main purpose is to amend certain sections of the National Internal Revenue Code concerning the taxation of educational institutions, especially by removing some exemptions and imposing a fixed income tax rate on private educational institutions.
Private educational institutions, whether stock or nonstock, are subject to the fixed rate tax of ten percent on their taxable net income from school operations, related school activities, and passive investment income.
A tax rate of ten percent (10%) is imposed on the taxable net income of private educational institutions from their school operations and passive investment income.
Dividends received from domestic or resident foreign corporations by private educational institutions are subject to partial exclusion under the intercorporate dividends provisions outlined in Section 29(c) of the National Internal Revenue Code.
Corporations or associations organized and operated exclusively for religious, charitable, scientific, athletic, cultural purposes, or rehabilitation of veterans and where no part of the net income benefits any private stockholder or individual.
No. Income derived from properties or profit-making activities by exempt organizations is subject to the tax imposed under this Title, regardless of how such income is used or disposed of.
Private educational institutions are allowed to deduct expenses incurred during the taxable year for the expansion of school facilities, besides the regular allowable expenses under paragraph (1) of Section 30(a).
The decree took effect beginning the calendar year 1974 and for the fiscal year starting July 1, 1974.