Condominium association fees not subject to local business tax — CTA

Published September 16, 2020, 11:16 AM

by Jun Ramirez

The Court of Tax Appeals (CTA) has declared that association dues collected by condominium operators from unit owners are not subject to local business tax.

Court of Tax Appeals (MANILA BULLETIN)
Court of Tax Appeals

The court’s Second Division issued the ruling when it ordered Taguig City government to return P5.7 million in “erroneously or illegally” paid business tax by Serendra Condominium Corporation (SCC) of Global City in 2013.

The local government unit (LGU) argued that under the local tax code, payment for services rendered by the corporation to unit dwellers is income and subject to business tax.

But the court agreed with the position of the SCC that it does not derive profit from the collection of membership fees.

The non-stock, non-profit SCC said the dues are used exclusively  to defray administrative and management expenses like janitorial, security, repair, and other ancillary services.

The 41-page resolution also mentioned the Supreme Court ruling on a similar issue.

It said the high tribunal stated that corporations managing condominiums are  not engaged in business when they collect membership dues from unit owners.