The Revenue Memorandum Circular clarifies the prohibition on private inurement for non-stock and non-profit organizations exempt from income tax under Section 30 of the National Internal Revenue Code. It specifies that an organization's earnings or assets cannot benefit trustees, organizers, officers, members, or other specific persons. The circular lists six examples of prohibited private inurement, such as paying salaries or honorariums to trustees or organizers, excessive compensation to employees, or distributing remaining assets to insiders upon dissolution.
The Revenue Memorandum Circular clarifies the prohibition on private inurement for non-stock and non-profit organizations exempt from income tax under Section 30 of the National Internal Revenue Code. It specifies that an organization's earnings or assets cannot benefit trustees, organizers, officers, members, or other specific persons. The circular lists six examples of prohibited private inurement, such as paying salaries or honorariums to trustees or organizers, excessive compensation to employees, or distributing remaining assets to insiders upon dissolution.
The Revenue Memorandum Circular clarifies the prohibition on private inurement for non-stock and non-profit organizations exempt from income tax under Section 30 of the National Internal Revenue Code. It specifies that an organization's earnings or assets cannot benefit trustees, organizers, officers, members, or other specific persons. The circular lists six examples of prohibited private inurement, such as paying salaries or honorariums to trustees or organizers, excessive compensation to employees, or distributing remaining assets to insiders upon dissolution.
the inurement prohibition under Section 30 of the National Internal Revenue Code (NIRC) of 1997. In order for an entity to qualify as a non-stock and/or non-profit corporation/association/organization exempt from Income Tax under Section 30 of the NIRC, as amended, its earnings or assets shall not inure to the benefit of any of its trustees, organizers, officers, members or any specific person. The following are considered “inurements” of such nature: a. Payment of compensation, salaries, or honorarium to its trustees or organizers; b. Payment of exorbitant or unreasonable compensations to its employees; c. Provision of welfare aid and financial assistance to its members; d. Donation to any person or entity (except donations made to other entities formed for the purpose/s similar to its own); e. Purchase of goods or services for amounts in excess of the fair market value of such goods or value of such services from an entity in which one or more of its trustees, officers or fiduciaries has an interest; and f. Distribution of entity’s remaining assets to its trustees, organizers, officers or members upon dissolution and satisfaction of all liabilities.