2014 (Taxation) Bar Exam Questions: Question 19

[Answer / discuss the question below. Or see 2014 bar exam Taxation Instructions; 2014 Taxation essay and multiple choice Questions: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28 and 29; See also 2014 Bar Exam: Information, Discussions, Tips, Questions and Results]


The Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 65-2012 imposing Value-Added Tax (VAT) on association dues and membership fees collected by condominium corporations from its member condominium-unit owners. The RMC’s validity is challenged before the Supreme Court (SC) by the condominium corporations.

The Solicitor General, counsel for BIR, claims that association dues, membership fees, and other assessment/charges collected by a condominium corporation are subject to VAT since they constitute income payments or compensation for the beneficial services it provides to its members and tenants.

On the other hand, the lawyer of the condominium corporations argues that such dues and fees are merely held in trust by the condominium corporations exclusively for their members and used solely for administrative expenses in implementing the condominium corporations’ purposes. Accordingly, the condominium corporations do not actually render services for a fee subject to VAT.

Whose argument is correct? Decide. (5%)


  1. about the change in the prtaetn of the Mains Examination till UPSC releases a formal notification. As of now, UPSC has formed a committee to review the existing prtaetn and format of the Mains examination and suggest changes. Read more about the prtaetn changes from Regards,Rau’s IAS

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