How to Obtain a BIR Certificate of Tax Exemption

In the Philippines, tax exemptions are not just for minimum-wage earners or those without income—they are also for large nonprofits, cooperatives, and other business entities qualified under certain tax laws. So, whether you’re a parent applying for your child’s college scholarship, a small business owner, or running a non-stock, nonprofit organization, these tax exemptions merit your attention. 

In this blog, we’ll break down who qualifies, what documents are needed, and how to apply for a BIR Certificate of Tax Exemption in the Philippines. Have questions or need help with your documentation? Let us know in the comments—we’re here to assist you!

What is a BIR Certificate of Tax Exemption?

A BIR Certificate of Tax Exemption (CTE) is an official document issued by the Bureau of Internal Revenue (BIR) through the respective Revenue District Office (RDO) to certify that a taxpayer, whether an individual or organization, is exempt from certain taxes, in accordance with applicable provisions of the National Internal Revenue Code (NIRC) of 1997, as amended, and other relevant laws and regulations. 

Who Can Apply for a Tax Exemption Certificate in the Philippines?

In the Philippines, tax exemptions, which may be full or partial, usually depend on the nature, purpose, and legal bases of the entity or income involved. Here’s a categorized list of those commonly exempted from taxes and who can apply for a BIR Certificate of Tax Exemption: 

Corporations and Organizations

Pursuant to Section 30 (Exemptions from Tax on Corporation) of the NIRC, the following entities are exempt from income tax received in the course of their operations: 

1. Labor, agricultural, or horticultural organization not organized principally for profit;
2. Mutual savings bank not having a capital stock represented by shares, and cooperative bank without capital stock organized and operated for mutual purposes and without profit;
3. A beneficiary society, order, or association, operating for the exclusive benefit of the members such as a fraternal organization operating under the lodge system, or mutual aid association or a nonstock 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 nonstock corporation or their dependents;
4. Cemetery company owned and operated exclusively for the benefit of its members;
5. Nonstock corporation or association organized and operated exclusively for religious, charitable, scientific, athletic, or cultural purposes, or for the rehabilitation of veterans, no part of its net income or asset shall belong to or inure to the benefit of any member, organizer, officer, or any specific person;
6. Business league chamber of commerce, or board of trade, not organized for profit and no part of the net income of which inures to the benefit of any private stock-holder, or individual;
7. Civic league or organization not organized for profit but operated exclusively for the promotion of social welfare;
8. A nonstock and nonprofit educational institution;
9. Government educational institution;
10. Farmers’ or other mutual typhoon or fire insurance company, mutual ditch or irrigation company, mutual or cooperative telephone company, or like organization of a purely local character, the income of which consists solely of assessments, dues, and fees collected from members for the sole purpose of meeting its expenses; and,
11. Farmers’, fruit growers’, or like associations organized and operated as a sales agent for the purpose of marketing the products of its members and turning back to them the proceeds of sales, less the necessary selling expenses on the basis of the quantity of produce finished by them.

Cooperatives

Under Articles 60 and 61 of R.A. 9520, cooperatives in the Philippines are granted tax exemptions, as implemented through Joint Rules and Regulations pursuant to Sections 4 and 244 of the NIRC and Article 144 of R.A. 9520. Cooperatives are classified based on the extent of their transactions: those that deal exclusively with members are fully exempt from taxes, while those that transact with both members and non-members may be partially exempt, depending on the proportion of non-member transactions.

Other Industry-Based Entities

Export-oriented enterprises and strategic industries can access various fiscal incentives, such as income tax holidays and special tax rates under the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) Law, provided they engage in qualifying activities. International carriers, dispatch, and foreign embassies also have exemptions from travel tax and VAT based on international agreements.   

Purposes of a BIR Certificate of Tax Exemption

A BIR Certificate of Tax Exemption serves several important functions, such as confirming a tax-exempt status, building public and donor trust, and facilitating government transactions:

Confirming Tax-Exempt Status

A BIR Certificate of Tax Exemption legally confirms the individual’s or organization’s exemption from certain national taxes—such as income tax, value-added tax (VAT), and withholding tax—and validates such a tax-exempt status. 

Building Public and Donor Trust

Many grant-making bodies, especially international donors, require proof of a local organization’s tax-exempt status before providing any funding. With this, a BIR Certificate of Tax Exemption opens doors to opportunities, especially for non-profits and NGOs. 

Facilitating Government Transactions

When dealing with government agencies, especially for permits, tax incentives, or public bidding, organizations may be required to submit their tax exemption certificates, which may serve as quick verifications and lead to streamlined government transactions. 

Protecting Against Future Tax Issues

In the event of a tax audit or compliance check, a BIR Certificate of Tax Exemption can provide clear legal proof that the subject organization is entitled to specific tax exemptions. Maintaining an updated tax exemption certificate but gives assurance and peace of mind. 

Supporting Scholarship Application

While families and parents applying for scholarships for their children are often required to provide proof of income or tax-exempt status as part of the eligibility criteria, the tax exemption certificate validates the financial need and ensures support is given to those who truly qualify. 

Requirements for BIR Certificate of Tax Exemption

Before visiting the BIR Revenue District Office (RDO) in your area to apply for a BIR Certificate of Tax Exemption, ensure you have prepared the following documentary requirements:  

For Scholarship and Job/Livelihood Programs

Based on the Bureau of Internal Revenue (BIR) Citizen Charter of 2020, the following are the documentary requirements for tax exemption certificate application for scholarship and job/livelihood purposes: 

1. Certificate of Low Income or No Income signed by the Barangay Chairman of the place where the applicant resides; 
2. Duly notarized Affidavit of Low Income or No Income from a notary public; 
3. Proof of payment of PHP 100 Certification Fee and PHP 30 Loose Documentary Stamp Tax from the Collection Section of your RDO; and 
4. Special Power of Attorney (SPA) and government-issued ID (if filed by an authorized representative)

For Cooperatives

For cooperatives applying for a tax exemption certificate, documentary requirements include (BIR Revenue Memorandum No. 124-2022):  

1. Certified true copies (CTCs) of the Articles of Cooperation and By-Laws, as certified by the CDA; 
2. Certified true copy (CTC) of the new Certificate of Registration issued by the CDA under the new Cooperative Code, as certified by the CDA; 
3. Certified true copy (CTC) of the current Certificate of Good Standing issued by the CDA effective on the date of application; 
4. Certified true copy (CTC) of the BIR Certificate of Registration of the cooperative;
5. 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;
6. Other additional documents (if filed by an authorized representative)

For Non-Stock, Nonprofit Educational Institutions

For non-stock and non-profit educational institutions, documentary requirements include (BIR Revenue Memorandum Order No. 44-2016): 

1. Original copy of the application letter for the issuance of Tax Exemption Ruling;
2. Certified true copy (CTC) of the Certificate of Good Standing issued by the Securities and Exchange Commission;
3. 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; 
4. Certified true copy (CTC) of the Financial Statements for the last three (3) years; 
5. Certified true copy (CTC) 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);  
6. 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;
7. 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; and
8. Other additional documents (if filed by an authorized representative)

For Other Non-Stock, Nonprofit Corporations

For other non-stock and non-profit corporations (other than educational institutions), documentary requirements include (BIR Revenue Memorandum Order No. 38-2019): 

1. 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; 
2. Certified true copy (CTC) of the latest Articles of Incorporation (AOI) and By-Laws issued by the Securities and Exchange Commission (SEC); 
3. 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;
4. 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; 
5. 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; and,
6. Other additional documents (if filed by an authorized representative)