How to Register a Non-stock Non-profit in the Philippines?

By: Tax and Accounting Center Philippines

You may have a charitable mind and a big heart having in mind the general welfare of the less privileged and the needy, or you may simply want to operate a non-stock, non-profit entity for a reason or another, this article could be of help.

Non-stock and non-profit corporation in the Philippines is one who operates for a not-for-profit undertaking such as charitable institutions, associations, foundations, health organizations, environmental activities, and others in line. It does not issue shares of stocks to stockholders but rather admit members based on established rules in its By-laws. Its operational funds could come from donations, members contributions, and some proceeds from fund raising activities. For tax purposes, it could be exempted from income tax and value added tax on sales  based on BIR Ruling issued. It is however subject to withholding taxes on its income payments and compensation, and could be passed on 12% value added tax on its purchases from VAT-registered suppliers.

Details of incorporators 

To register a non-stock, non-profit corporation, you need to have the following to start with:

1. At least five (5) incorporators, majority of them must be residents in the Philippines;
2. Complete address of each incorporator;
3. BIR Tax identification number (TIN) of each incorporator;
4. Contribution of incorporators and members;

Based on the above details, you may now proceed with the documentation. Securities and Exchange Commission (SEC) in the Philippines would require the following documentary requirements:

Basic SEC Requirements

• Name verification slip of the company name to be used. This should be reserved manually with the Securities & Exchange Commission (SEC) for minimal fees – P40.00 for every 30 days up to a maximum of 90 days subject to renewal or online through the SEC -Register;
• Articles of Incorporation and By-laws;
• Joint affidavit of two (2) incorporators undertaking to change name;
• List of members, as certified by the corporate secretary, unless already stated in the Articles of Incorporation; and,
• List of names of contributors or donors and the amounts contributed or donated, as certified by the treasurer.

Additional SEC Requirements

• For Foundation – Notarized certificate of bank deposit of the contribution of not less than P1M along with statement of willingness to allow SEC to conduct an audit;
• For Religious Corporation – Refer to Setions 109-116 of the Corporation Code of the Philippines, and an affidavit of affirmation or verification by the chief priest, rabbi, minister or presiding elder;
• For Federations – Certified list of member-associations by Corporate Secretary or President;
• For Condominium corporations or associations -Master Deed with primary entry of the Register of Deeds and certification that there is no other existing similar condominium association within the condominium project.

SEC in the Philippines has a set of express forms for some ready to fill-out SEC registration forms.  Alternatively, you may have your own customized forms and documents that is in accordance with the format of SEC in relation to the provisions of the Corporation Code of the Philippines applicable to non-stock, non-profit corporations in the Philippines. You may need an assistance of a lawyer or  somebody with better appreciation of the requirements for registering a non-stock, non-profit corporation in the Philippines.

SEC application and approval

Initial registration papers carefully prepared for the purpose will undergo initial evaluation of the SEC, and finding the same in order will be assessed filing and other fees based on the proposed capitalization. Payment of the filing and other fees marks the formal filing of the application and normal approval procedures would immediately follow. Approval normally comes in a couple of days to not more than ten (10) days.

Tax Authority Registration

SEC will assign a tax identification number (TIN) upon release of the Certificate of Incorporation  in the Philippines and such TIN shall be formally registered with the Bureau of Internal Revenue (BIR). Certain registration fees and taxes will be paid and other registrations for books of accounts, and official receipts or invoices will follow. For tax exemptions of non-stock non-profit corporation in the Philippines, you need to secure BIR ruling with the tax authority with the Revenue District Office (RDO) of registration.

Business Permits & Licenses

For the legality of its local operations, business permit has to be secured with the local government unit of business location. Certain fees and other registrations are likewise required such as community tax certificate, barangay clearance, fire permit, occupancy permit, and the likes.

Employee safeguards registrations

Employer registration with the Social Security System (SSS), Philippine health Insurance Corporation (Philhealth), and Home Development Mutual Fund (HDMF) is likewise mandatory and will proceed independent of the above.

Complete Processing Timetable

With the improved processing system of the government agencies, complete processing of the above will take three (3) to four (4) weeks from filing with the Securities and Exchange Commission. We suggest you secure the services of professionals to assist you in the complete registration of your Philippine Company that you may be able to simply concentrate on operational matters.

Disclaimer: This article is for general conceptual guidance only and is not a substitute for an expert opinion. Please consult your preferred tax and/or legal consultant for the specific details applicable to your circumstances. For comments, you may please send mail at info@taxacctgcenter.org.)

See how we can help you with our professional services…

See our quality seminars, workshops, and trainings…

Read More Articles…