WHAT IS TAX EXEMPTION

Taxes are the lifeblood of the government and they are necessary to fund government services
such as healthcare, education, and social security. However, there are instances where
exemptions may be given, which allow the individual or organization to pay zero tax. A tax
exemption refers to an individual’s or an organization’s legal right to exclude all or a
percentage of income/transactions from taxation. If an income or transaction is tax-exempt
or tax-free, it is not part of the tax computation. This results in either lower taxes or no tax at all.

What is a Certificate of Tax Exemption?

Certificate of Tax Exemption or CTE is issued to individuals or organizations who are

exempt from tax. Exemption from taxation, as the name suggests, is when certain individuals,
organizations, or institutions are free from taxes due to privileges granted by legislative grace.
Because the government compels the citizens to pay taxes, exemptions are being analyzed
strictly against the taxpayer.

BIR Tax Exemption Certificate Sample.

Who are qualified for tax exemption in the Philippines?

According to the Tax Code1, the following are exempt from paying taxes and therefore may be
issued Certificate of Tax Exemption:

 Individuals with no income, minimum wage earners, and those whose taxable income does
not exceed PHP 250,000.
 Cooperatives registered in the Cooperative Development Authority (CDA) which transact
business with members only.
 CDA-registered cooperatives which transact business with members and non-members, with
accumulated reserves and undivided net savings of not more than PHP 10 million.
 Non-stock, nonprofit educational institutions.
 Non-stock, nonprofit corporations that fall under Section 30 of the National Internal Revenue
Code.

Where to get a Certificate of Tax Exemption?

The Certificate of Tax Exemption (CTE) is obtained from the Revenue District Office
(RDO) having jurisdiction over the residence of the taxpayer or where the taxpayer is registered.

Certificate of Tax Exemption Requirements.

1. For Scholarship  and Job/Livelihood Programs.

The BIR Citizen’s Charter of 20202 provides for the following documentary requirements:

 Certificate of Low Income or No Income signed by the Barangay Chairman of the place
where the applicant resides
 Duly notarized Affidavit of Low Income or No Income from a notary public
 Proof of payment of PHP 100 Certification Fee and PHP 30 loose Documentary Stamp Tax
from the Collection Section of your RDO  
Additional documents if transacting through a representative:

 Special Power of Attorney executed by the applicant

 Government-issued ID of authorized representative

2. For Cooperatives.
The Revenue Memorandum Circular No. 124-20203 lists the below requirements:

a. Requirements for New Application.

 Certified True Copies of the Articles of Cooperation and By-Laws, as certified by the CDA;
 Certified True Copy of the New Certificate of Registration issued by the CDA under the new
Cooperative Code, as certified by the CDA;
 Certified True Copy of the current Certificate of Good Standing issued by the CDA effective
on the date of application;
 Certified True Copy of the BIR Certificate of Registration of the Cooperative; and
 Original Copy of Certification under Oath of the List of Cooperative Members with their
respective Taxpayer Identification Number (TIN), if already available, and their capital
contributions prepared by the authorized official of the Cooperative.

b. Requirements for Renewal.

 Certified True Copies of the Latest Articles of Cooperation and By-Laws, as certified by the
CDA;
 Certified True Copy of the new Certificate of Registration issued by the CDA under the new
Cooperative Code, as certified by the CDA;
 Certified True Copy of the current Certificate of Good Standing issued by the CDA effective
on date of application; and
 Certified True Copy of Latest financial statements of the immediately preceding year duly
audited by a BIR-accredited independent Certified Public Accountant.

3. For Non-Stock, Nonprofit Educational Institutions.

Revenue Memorandum Order No. 44-20164 provides the following requirements in the
issuance of CTE:

 Original copy of the application letter for the issuance of Tax Exemption Ruling
 Certified True Copy of the Certificate of Good Standing issued by the Securities and
Exchange Commission
 Original copy of the Certification under Oath of the Treasurer as to the amount of the income,
compensation, salaries or any emoluments paid to its trustees, officers and other executive
officers
 Certified True Copy of the Financial Statements for the last three years
 Certified True copy of government recognition/permit/accreditation to operate as an
educational institution issued by the Commission on Higher Education (CHED), Department
of Education (DepEd), or Technical Education and Skills Development Authority (TESDA); 
 If the government recognition/permit/accreditation was issued five years prior to the
application, an original copy of a current Certificate of Operation/Good Standing or other
equivalent document issued by the appropriate government agency (CHED, DepEd, or
TESDA) shall be submitted as proof that it is operating as non-stock and nonprofit
educational institution
 Original copy of the Certificate of Utilization of Annual Revenues and Assets by the
Treasurer or his equivalent of the non-stock and nonprofit educational institution
4. For Non-Stock, Nonprofit Corporations.

Revenue Memorandum Order No. 38-2019 provides the following requirements in the

issuance of CTE:

 Original application letter for issuance of Tax Exemption Ruling. The letter shall cite the
particular paragraph of Section 30 of the NIRC upon which the application for exemption is
being based;
 Certified true copy of the latest Articles of Incorporation (AOI) and By-Laws issued by the
Securities and Exchange Commission (SEC)
 Original Certification under Oath by an executive officer of the corporation or association as
to:

-full description of its past, present, and proposed activities,

-the sources and disposition of income,

-detailed description of all revenues which it seeks to be exempted from income tax, and

-amount of income, compensation, salaries or any emoluments paid by the corporation or

association to its trustees, officers and other executive officers.

 Original Certification issued by the RDO where the corporation or association is registered,
indicating the TIN of the corporation, and certifying that said corporation is not subject of any
pending investigation, on-going audit, pending tax assessment, administrative protest, claim
for refund or issuance of tax credit certificate, collection proceedings, or a judicial appeal; or
if there be any, the Original Certification issued by the RDO on the status thereof; and
 Certified True Copies of the Income Tax Returns or Annual Information Returns and
Financial Statements of the corporation or association for the last three (3) years.

How to Apply for a Certificate of Tax Exemption in the Philippines.

For Scholarship and Job/Livelihood Programs.

1. Submit the requirements in the Administrative Section of your RDO.

2. Pay Certification Fee and loose Documentary Stamp Tax at the Collection Section and
present the proof of payment to the Administrative Section.
3. Receive requested documents in the Administrative Section.

For Cooperatives.

1. Accomplish the BIR Form 1945 in three (3) copies, signed by the applicant who may either
be the President or any responsible officer of the cooperative authorized to file the
application for and on behalf of the cooperative.
2. Submit the form to the BIR District Office where the cooperative is registered, along with all
the necessary documents.

For Non-Stock, Nonprofit Educational Institutions.

Non-stock, nonprofit educational institutions shall file their Applications for Tax Exemption with
the Office of the Assistant Commissioner, Legal Service, Attention: Law Division.

For Non-Stock, Nonprofit Corporations.

1. File the request for Certificate of Tax Exemption with the RDO where the corporation is
registered for pre-evaluation.
2. If qualified based on pre-evaluation, the RDO officer shall prepare the CTE (Annex “B”),
together with a memorandum stating the factual and legal basis for recommending the
issuance of the CTE, and endorse the documents to the Office of the Regional Director.
3. The Regional Director shall sign the CTE if he agrees with the RDO’s recommendation and
issue the CTE to the requesting corporation, otherwise he shall return the documents to the
RDO along with his findings/instructions.
4. If not qualified based on pre-evaluation, the RDO shall notify in writing the applicant
stating the factual and legal bases for the denial of CTE, and the corporation shall be held
liable for income tax.

Frequently Asked Questions.

1. Can I apply for tax exemption online or via email?

Currently, the BIR does not provide an online application for tax exemption. This can only
be processed by physically going to your RDO to submit the requirements.

2. Do I need to submit all the requirements listed above to obtain the

Certificate of Tax Exemption?
Yes. All requirements listed above for specific applicants are necessary to get CTE.

3. How can I apply for tax exemption for a religious organization?

Religious organizations shall follow the procedures of application for tax exemption under non-
stock, nonprofit corporations.

4. I’m a student applying for a scholarship . How can I apply for a tax
exemption?
You must complete the required documents for obtaining a CTE for scholarships and submit
them to your RDO.

5. Is there a specific template for Certificate and Affidavit of Low/No Income?

The BIR did not provide a particular template in their current list of certificates 6 available in the
website. However, make sure you have specified the intended purpose of the application for
Certificate of Tax Exemption.

6. How can I apply for tax exemption for scholarship purposes if my parents’
place of residence is far from mine?
For documents you are unable to procure, you may clarify it with the BIR by contacting their
Customer Assistance Division (formerly BIR Contact Center) at Hotline No. 8538-3200 or
sending an email to contact_us@bir.gov.ph. You may also inquire through submitting a request
to the Electronic Freedom of Information Program or eFOI.