SENATE OF THE PHILIPPINES 
SIXTEENTH CONGRESS 
First Regular Session 
) 
I 
) 
SENATE 
, ,,,,'- . 
Senate Bill No. 
2250 
Srullh' 
lOll.;. of I~. *" .. br~ 
'14 
MAY 28 All:46 
RECE!vt:D BV:f'--
Introduced by SENATOR JOSEPH VICTOR G. EJERCITO 
AN ACT CLASSIFYING THE ASSOCIATION DUES AND MEMBERSHIP 
FEES COLLECTED BY HOMEOWNERS ASSOCIATIONS OR 
CONDOMINIUM CORPORATIONS FROM THEIR MEMBERS OR 
TENANTS AS EXCLUDED FROM INCOME TAX OR VALUE ADDED 
TAX (VAT), AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 8424 
AND FOR OTHER PURPOSES 
EXPLANATORY NOTE 
This measure aims to exclude from income tax and value-added 
tax the association dues or membership dues paid by homeowners to 
their housing association or condominium corporations for the upkeep 
and maintenance of their housing tenements, common areas of their 
condominium buildings and other items that will help ensure a safe and 
healthy environment for homeowners. 
Association or membership or condominium dues cannot be 
considered income of the association because it can only be spent on the 
intended purpose of homeowners who placed it in trust of the 
homeowners association or condominium corporations. The association 
has no discretion in the use or spending of these funds since these are 
not their income subject to their disposition. 
Certainly the funds cannot also be deemed as payment for sale or 
services or any transaction subject to VAT. These are payment by the 
members to hire security or janitorial services, and other maintenance 
work, all of which will later on subject to VAT, initially held in trust by 
the association and cannot therefore be subject to another VAT. 


The Bureau of Internal Revenue itself had issued several rulings in 
the past, which exempts from income tax the assessment/charges 
collected by condominium corporations from its members, on the ground 
that the collection of association dues and other assessments/charges 
were merely held in trust to be used solely for administrative expenses in 
implementing its 
purposes, 
such as 
operating, 
managing and 
maintaining the condominium, and from which no gain or profit can be 
realized by the condominium corporation from the receipt thereof. 
There is a housing problem in the country and the government 
should not only build housing units for the people to address this 
problem but must also encourage those who are capable of owning a 
house to invest in the building or owning of a home of their own. 
Encouraging people who can afford to invest in or acquire their own 
homes, is never more pronounced because government claims to be 
incapable of building houses to solve the lack of housing. In fact, taxing 
association dues practically goes against all government policies in 
response to the housing shortage including policies related to 
encouraging low cost or socialized housing for the poor and those who 
cannot afford their housing needs. 
Taxing association or membership dues will not only increase the 
cost of owning a home but will discourage people from investing in 
acquiring or building their homes, which will surely exacerbate the 
housing crisis in the country. 
In view of the foregoing, the passage of this bill is earnestly sought . 
.,.. 
G'Ef .~ 
• 
JOSEPH VICTOR G. EJERCITO 


'. 
SENATE OF THE PHILIPPINES 
SIXTEENTH CONGRESS 
First Regular Session 
) 
) 
) 
SENATE 
Senate Bill No. 
2250 
's~mlt!' 
(~If,;r "I ill' j'IT.I",~ 
"14 
MAY 28 All:46 
Introduced by SENATOR JOSEPH VICTOR G. EJERCITO 
AN ACT CLASSIFYING THE ASSOCIATION DUES AND MEMBERSHIP 
FEES COLLECTED BY HOMEOWNERS ASSOCIATION OR 
CONDOMINIUM CORPORATIONS FROM THEIR MEMBERS OR 
TENANTS AS EXCLUDED FROM INCOME TAX OR VALUE ADDED 
TAX AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 8424 AND 
FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the 
Republic of the Philippines in Congress assembled: 
SECTION 1. Section 30 (C) of Republic Act 8494, otherwise known 
as the National Internal Revenue Code, as amended, is hereby amended 
to read as follows: 
"SECTION 30. Exemptions from Tax on Corporations. -
The 
following organizations shall not be taxed under this Title in respect to 
income received by them as such: 
xxxxx 
"(C) A beneficiary society, order or association, operating for the 
exclusive benefit of the members such as fraternal organization operating 
under the lodge system, or mutual aid association or a non-stock 
corporation organized by employees providing for the payment of life, 
sickness, accident, or other benefits exclusively to the members of such 
society, order or association, or non-stock corporation or their 
dependents, OR A NON-PROFIT CONDOMINIUM CORPORATION OR 


'. 
HOMEOWNERS' ASSOCIATION HOLDING IN TRUST ASSOCIATION OR 
MEMBERSHIP DUES FOR THE BENEFIT OF THE MEMBERS; 
SECTION 2. Section 32 (B) of the Republic Act No. 8424, otherwise 
known as the National Internal Revenue Code, as amended, is hereby 
amended to read as follows: 
"SECTION 32. Gross Income. -
"(A) General Definition. x x x x 
"(B) Exclusions from Gross Income. - The following items shaH not 
be included in the gross income and shall be exempt from taxation under 
this Title: 
"(1) x x x x 
"(2) x x x x 
"(7) Miscellaneous Items. -
"(a) x x x x 
"(b) x x x x 
"(f) GSIS, SSS, Medicate and Other Contributions. - GSIS, SSS, 
Medicare and Pag Ibig Contributions, and union dues of individuals AND 
AMOUNTS PAID AS ASSOCIATION DUES AND MEMBERSHIP FEES 
COLLECTED 
BY 
A 
CONDOMINIUM 
CORPORATION 
OR 
A 
HOMEOWNERS' ASSOCIATION FROM THEIR MEMBERS OR TENANTS." 
SECTION 3. Section 109 (t) of Republic Act 8494 is hereby 
amended to read as follows: 
"SECTION 109. Exempt Transactions. -
The following shall be 
exempt from the value-added tax: 
"(a) x x x x 
"(b) x x x x 
xxxxx 
"(t) Gross receipts from lending activities by credit or multi-purpose 
cooperatives duly registered with the Cooperative Development Authority 
whose lending operation is limited to their members; GROSS RECEIPTS 
OF CONDOMINIUM CORPORATIONS OR HOMEOWNERS' ASSOCIATION 
FOR AMOUNTS PAID AS ASSOCIATION DUES OR MEMBERSHIP FEES 
COLLECTED 
BY 
A 
CONDOMINIUM 
CORPORATION 
OR 
A 
HOMEOWNER'S ASSOCIATION FROM THEIR MEMBERS OR TENANTS." 


SECTION 4. Repealing Clause. -
All laws, decrees, resolutions, 
orders or ordinances or parts thereof inconsistent with this Act, are 
hereby repealed, amended or modified accordingly. 
SECTION 5. Effectivity Clause. - This shall take effect fifteen 
days following its publication for two consecutive weeks in the newspaper 
of general circulation in the Philippines. 
Approved,