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BIR instructs field officials to determine taxability of canteens, bookstores, dorms, and schools

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By Jun Ramirez

The Bureau of Internal Revenue (BIR) has instructed field officials nationwide to investigate canteens, bookstores, dormitories and other ancillary businesses of nonstock and nonprofit schools to determine their taxability.

BIR logo and building (Manila Bulletin file photo)

BIR (Manila Bulletin File Photo)

In a memorandum, BIR Commissioner Caesar R. Dulay said that these educational institutions are tax exempt under the Constitution if income from these additional activities are “actually, directly and exclusively for educational purposes.”

Otherwise, the said income is subject to income and percentage or value-added taxes.

Dulay explained that the tax compliance verification drive (TCVD) is in line with the bureau’s efforts to improve tax compliance, expand the tax base and carry out its priority programs for 2018.

To continue enjoying the tax exemption privileges, Dulay said these additional business activities must be operated, owned and located within the premises of the nonstock and nonprofit educational institution.

Reports reaching the BIR showed that many tax-free schools allowed outsiders to operate cafeterias, bookstores and dormitories within their areas.

Dulay issued the directive to revenue regional directors, district officers and heads of the specialized audit divisions in the national officer, the large taxpayers service.

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