MANILA, Philippines — Donations in response to the COVID-19 pandemic will not only be exempt from donor’s tax but also deducted from companies and individuals’ gross income subjected to tax.
Revenue Regulations (RR) No. 9-2020 published on Wednesday was signed by Finance Secretary Carlos G. Dominguez III and Internal Revenue Commissioner Caesar R. Dulay, listing down the “benefits” on donations during the enhanced community quarantine being imposed in Luzon and other areas, now extended until April 30.
The BIR acknowledged that “the private sector has taken the bold step of working side-by-side with various stakeholders to heed the government’s call in the fight against COVID-19,” adding that private firms and individuals alike had contributed financial assistance as well as donations in kind, including personal protective equipment (PPE) to medical front-liners.
The BIR noted that both the Tax Code and the Bayanihan to Heal as One Act provided perks to donors, such as exemption from donor’s tax as well as full deductibility from gross income of gifts or donations made in favor of the national government and non-profit institutions.
As such, the BIR said the following will be considered fully deductible against gross income of donor-corporations and -individuals: cash donations; donations of all critical or needed healthcare equipment or supplies (as listed down in the Bayanihan Law); relief goods, including food packs (rice, canned goods and noodles, etc.) as well as water; and use of property, whether real (buildings/lots) or personal (such as vehicles for shuttle services).
The full deductibility perk will be extended to donations to these donees: the national government and its agencies—including public hospitals—as well as any political subdivision and fully owned corporations as long as not conducted for profit; and accredited non-stock, non-profit educational and/or charitable religious, cultural or social welfare corporation, institution, foundation, non-government organization, trust or philanthropic organization, and/or research institution or organization, the BIR said.
To avail of this incentive, donors needed to submit a notice of donation alongside supporting documents—deed of donation for those given to the government, and certificate of donation for those coursed through non-government entities.
Amid the state of national emergency due to COVID-19, the BIR said that also exempted from taxes were donations or gifts to private hospitals and even non-accredited non-stock, non-profit institutions and organizations, as well as local private corporations, civil organizations and/or international organizations/institutions involved in COVID-19 relief activities, as long as they complied with the documentary requirements.
Also, the BIR said donated medical equipment and supplies alongside relief goods will be exempt from the value-added tax slapped on sales transactions, while “any input VAT attributable to such purchase of goods shall be creditable against any other output tax.”
The BIR can nonetheless audit and investigate these donations to verify if they were indeed qualified for donor’s tax exemption and deductibility from gross income.
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