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    RMC 9-2013

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    Marieal Inot
    This revenue memorandum clarifies that association dues, membership fees, and other assessments/charges collected by homeowners' associations constitute taxable income under existing tax laws. It states that these payments are made in exchange for beneficial services provided to members. However, under Section 18 of RA 9904, the dues and rental income of homeowners' associations may be exempted from income, VAT, and percentage taxes if the association is duly constituted, the local government confirms it cannot provide basic community services, and financial statements prove the funds are used for members' basic services and facility maintenance.

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    RMC 9-2013

    Uploaded by

    Marieal Inot
    97 views2 pages
    This revenue memorandum clarifies that association dues, membership fees, and other assessments/charges collected by homeowners' associations constitute taxable income under existing tax laws. It states that these payments are made in exchange for beneficial services provided to members. However, under Section 18 of RA 9904, the dues and rental income of homeowners' associations may be exempted from income, VAT, and percentage taxes if the association is duly constituted, the local government confirms it cannot provide basic community services, and financial statements prove the funds are used for members' basic services and facility maintenance.

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    This revenue memorandum clarifies that association dues, membership fees, and other assessments/charges collected by homeowners' associations constitute taxable income under existing tax laws. It states that these payments are made in exchange for beneficial services provided to members. However, under Section 18 of RA 9904, the dues and rental income of homeowners' associations may be exempted from income, VAT, and percentage taxes if the association is duly constituted, the local government confirms it cannot provide basic community services, and financial statements prove the funds are used for members' basic services and facility maintenance.

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    © All Rights Reserved
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    97 views2 pages

    RMC 9-2013

    Uploaded by

    Marieal Inot
    This revenue memorandum clarifies that association dues, membership fees, and other assessments/charges collected by homeowners' associations constitute taxable income under existing tax laws. It states that these payments are made in exchange for beneficial services provided to members. However, under Section 18 of RA 9904, the dues and rental income of homeowners' associations may be exempted from income, VAT, and percentage taxes if the association is duly constituted, the local government confirms it cannot provide basic community services, and financial statements prove the funds are used for members' basic services and facility maintenance.

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    REVENUE MEMORANDUM CIRCULAR NO.

    9-2013

    Clarifying the Taxability of Association Dues, Membership Fees, and Other


    Assessments/Charges Collected by Homeowners’ Associations

    Clarification

    I. Income Tax – Section 18 of R.A. No. 9904 which exempts from taxation the association dues and
    income derived from rental subject to certain conditions is an implied recognition by Congress that
    such receipts are subject to tax under existing laws. Thus, the amounts paid in as dues or fees by
    homeowner-members of a homeowners’ association form part of the gross income of the latter
    subject to income tax. This is because a homeowners’ association furnishes its members with
    benefits, advantages, and privileges in return for such payments. For tax purposes, the association
    dues, membership fees, and other assessments/charges collected by a homeowners’ association
    constitute income payments or compensation for beneficial services it provides to its members and
    tenants. The previous interpretation that the assessment dues are funds which are merely held in
    trust by a homeowners’ association lacks legal basis and is hereby abandoned.

    Moreover, since a homeowners’ association is subject to income tax, income payments


    made to it are subject to applicable withholding taxes under existing regulations.

    II. Value-Added Tax (VAT) and Percentage Tax – Association dues, membership fees, and other
    assessments/charges collected by a homeowners’ association are subject to VAT since they
    constitute income payment or compensation for the beneficial services it provides to its
    homeowner-members.

    EXEMPTION UNDER REPUBLIC ACT NO. 9904

    Pursuant to Section 18 of RA No. 9904, the association dues and income derived from
    rentals of the homeowners’ association’s prope rties may be exempted from income tax, VAT and
    percentage tax subject to the following conditions:

    a. The homeowners’ association must be a duly constituted “Association” as defined


    under Section 3(b) of RA No. 9904;

    b. The local government unit having jurisdiction over the homeowners’ rendered by
    the homeowners’ association and therein stating its lack of resources to render
    such services notwithstanding its clear mandate under applicable laws, rules and
    regulations. Provided further, that such services must fall within the purview of the
    “basic communit y services and facilities” which is defined under Section 3(d) of RA
    No. 9904 as those referring to services and facilities that redound to the benefit of
    all homeowners and from which, by reason of practicality, no homeowner may be
    excluded such as, but not limited to: security; street and vicinity lights;
    maintenance, repairs and cleaning of streets; garbage collection and disposal; and
    other similar services and facilities.; and
    c. The homeowners’ association must present proof (i.e . financial statements) that
    the income and dues are used for the cleanliness, safety, security and other basic
    services needed by the members, including the maintenance of the facilities of their
    respective subdivisions or villages.

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