The educational system is a vital component in the economic development of any country. In the Philippines, no less than our constitution recognizes this role of the education sector. Consistent with this policy, the State does provide special tax treatment to certain class of educational institutions.
The term “unrelated trade, business or other activity” means any trade, business or other activity, the conduct of which is not substantially related to the exercise or performance by such educational institution of its primary purpose or function.
All revenues and assets of non-stock, non-profit educational institution used actually, directly and exclusively for educational purposes shall be exempt from taxes and duties, pursuant to Paragraph 3, Section 4, Article XIV of the 1987 Constitution, and as reiterated in Section 30 of the Tax Code.