GUIDELINES IN PROCESSING AND ISSUANCE OF CERTIFICATE OF TAX EXEMPTION UNDER RMO ORDER NO. 38-2019 ENTITLED AS “TAX EXEMPTION OF NON-STOCK, NON-PROFIT CORPORATIONS UNDER SECTION 30 OF THE TAX CODE, AS

REVENUE MEMORANDUM ORDER NO. 22-2025

This was issued to amend the certain portions of RMO No.38-2019 to align with the intentions of RA No. 12021 or “Magna Carta of Filipino Seafarers’’.

Tax Exemption of a Legitimate Labor Organization of Seafarers

Under RA No. 12021, income, properties, grants, endowments, gifts, and contributions received by legitimate labor organizations of seafarers are tax-exempt—provided they are actually, directly, and exclusively, used for their lawful purposes. This exemption can only be revoked by a special law explicitly Section 8 (second paragraph) of the Act.

Legitimate seafarers’ labor organizations remain subject to limitations on income tax exemption, withholding agent obligations, and VAT or percentage tax liability as specified in this Order.

Documentary Requirements for the Availment of Tax Exemptions

Legitimate labor organizations of seafarers must register with the appropriate RDO and submit the following documents:

1. A certified true copy of their latest Articles of Incorporation (AOI) and By-Laws issued by the Securities and Exchange Commission (SEC), which must clearly state that:
   > The organization is non-stock and non-profit;
   > No part of its net income benefits any private individual;
   > Its trustees do not receive compensation; and
   > Upon dissolution, its assets will be distributed to similar organizations or for public purposes.
2. An original Certification under Oath by an executive officer detailing:
   > A full description of past, current, and proposed activities;
   > Sources and disposition of income;
   > Revenues sought to be exempted from income tax; and
   > Any compensation paid to trustees or officers.
   
3. A certified true copy of a Department of Labor and Employment (DOLE)-issued certificate confirming the organization’s registration as a legitimate labor organization, to be submitted within 60 days from the effectivity of the IRR of RA No. 12021.

While a CTE is not needed, the organization’s tax-exempt status remains subject to post-audit or investigation by the BIR. To maintain eligibility, an updated certified true copy DOLE certificate must be attached to the annual income tax return. Any cancellation or lapse in DOLE registration must be reported to the BIR, or the organization may be penalized under relevant tax laws and regulations.

Quarterly Report on the Issuance of CTEs and Annual Report Availment of Tax Exemptions

All Regional Directors must submit a Quarterly Summary Report of all CTEs issued to Section 30 corporations, along with copies, to Audit Information, Tax Exemption and Incentives Division (AITEID) by the 20th day of the month following end of each quarter, with a copy to the Assistant Commissioner, Legal Service.

Revenue District Offices must maintain a record of all labor organizations availing incentives under RA No. 12021 and submit an annual inventory to AITEID, also copying the Assistant Commissioner, Legal Service, by January 30 each year.