WHEREAS,
under existing law, educational institutions are not placed at par for
taxation purposes as some are subject to tax and others are not subject
to tax; chanroblesvirtualawlibrary
WHEREAS, in line with the provisions of the New Constitution removing
the exemptions of educational institutions from real estate taxes,
their exemption from income tax should likewise be removed, as provided
under existing laws;chanroblesvirtualawlibrary
WHEREAS, to achieve simplicity in implementation, there should be
imposed a fixed rate of tax on all income of educational institutions;chanroblesvirtualawlibrary
WHEREAS, in order to achieve improvements in educational facilities and
expansion of educational activities, the re-investment of profits or
surplus necessary therefrom should be encouraged;chanroblesvirtualawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers in me vested by the Constitution as
Commander-in-Chief of all the Armed Forces of the Philippines and
pursuant to Proclamation No. 1081 dated September 21, 1972, and General
Order No. 1, dated September 22, 1972, as amended, do hereby order and
decree that certain sections of the National Internal Revenue Code, as
amended, be further amended, to read as follows:cralaw:red
"Sec. 24. Rates of tax on corporations — (a) Tax on
domestic corporations. — . chanroblesvirtualawlibrary
Private educational institutions, whether stock or non-stock, shall pay
a tax of ten percent of their taxable net income from the operation of
the school, related school activities, and on their passive investment
income consisting of interest, dividends, royalties, and the like;
Provided, however, That dividends received by a private educational
institution, whether stock or non-stock, from a domestic or resident
foreign corporation shall be subject to the partial exclusion of
intercorporate dividends provided under Section 29 (c) of this Title,
under the conditions imposed in the said subjection.
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Sec. 27. Exemption from tax on corporations. —.
(e) Corporation or association organized and operated
exclusively for religious, charitable, scientific, athletic, or
cultural purposes, or for the rehabilitation of veterans, no part of
the net income of which insures to the benefit of any private
stockholder or individual.
However, the income of any of the foregoing organizations of whatever
kind and character from any of their properties, real or personal, or
from any activity conducted for profit, regardless of the disposition
made of such income, shall be liable to the tax imposed under this
Title.
Sec. 30. Deductions from gross income. — . chanroblesvirtualawlibrary
(a) Expenses:cralaw:red
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(4) Expenses allowable to private educational
institutions. —chanroblesvirtualawlibrary
In addition to the expenses allowable as deductions under paragraph (1)
of this sub-section, a private educational institution, whether stock
or non-stock, shall be allowed to deduct during the taxable year when
incurred expenses for the expansion of school facilities to be
determined by rules and regulations issued jointly by the Departments
of Education and Culture and Finance. chanroblesvirtualawlibrary
This Decree takes effect beginning the calendar year 1974 and fiscal
year beginning July 1, 1974.
Done in the City of Manila,
this 2nd day of October, in the year of Our Lord, nineteen hundred and
seventy-three.
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