Published — June 1, 2022
The following post does not create a lawyer-client relationship between Albuhttps://www.pexels.com/photo/man-love-people-woman-6647119/ro Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
Aside from this article regarding donations, you may also read: Online Registration System for One Person Corporation and Corporations with 2-4 Incorporators
The COVID-19 pandemic has greatly affected the livelihood of people. This is the time where the culture of “Bayanihan” by the Filipinos are being showcased as evidenced by the Bayanihan to Heal As One Act. As a response, Philippine government, private entities and private individuals have done and are doing their share.
In compliance with the Bayanihan to Heal As One Act, the Bureau of Internal Revenue (BIR), as the national tax authority under the direct control and supervision of the Department of Finance (DOF) has released Revenue Regulations No. 9-2020 dated April 6, 2020. The afore-stated Revenue Regulation grants further benefits on donations made during the period of Enhanced Community Quarantine (ECQ) in relation to the National Internal Revenue Code (NIRC) of 1997, as amended.
The following donations when given for the sole and exclusive purpose of combating COVID-19 during the period of the state of national emergency shall be considered fully deductible against the gross income of the donor (corporation or individual):
1. Cash donations;
2. Donations of all critical or needed healthcare equipment or supplies;
3. Relief goods
4. Use of property, whether real or personal
Is the donation automatic? NO. To be fully deductible and allowable as an expense against the gross income of the donor, said exempt donation/gifts shall be made to any of the following donees/recipients:
a. National Government or any entity created by any of its agencies (including public hospitals) which is not conducted for profit, or to any political subdivision of the said Government, including fully-owned government corporations. Any donation to these entities must be supported by a Deed of Donation.
b. 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 donor must submit a Certificate of Donation (BIR Form No. 2322).
Also, all donations (Nos 1, 2, 3, and 4 above), when donated during the period of the state of national emergency for the sole and exclusive purpose of combating COVID-19, subject to the timely submission of the documentary requirements shall also be considered as exempt from the Donor’s Tax and shall be deductible in full against the gross income of the donor when given to the following donees/recipients:
a. Private hospitals and/or non-stock non-profit educational and/or charitable, religious, cultural or social welfare corporation, institution, foundation, non-government organization (NGO) (even if non-accredited), trust or philanthropic organization and/or research institution or organization; and
b. Local private corporations, civic organizations, and/or international organizations/institutions provided that they shall:
i. actually, directly and exclusively distribute and/or transfer said donations/gifts to, and/or
ii. partner as conduit/logistical machinery with the accredited NGOs and/or national government or any entity created by any of its agencies which is not conducted for profit, or to any political subdivision of the said Government.
The submission of documentary requirements to the respective Revenue District Office where the donor and the donee-recipient are registered, in accordance with the form attached, shall be within sixty (60) days from the lifting of the ECQ.
Donations to foreign institutions or international organizations shall not be subject to the documentary requirements. Also, donations of all critical or needed healthcare equipment or supplies and relief goods shall not be treated as a transaction deemed sale subject to Value-Added Tax (VAT) under the NIRC, as amended. Furthermore, any input VAT attributable to such purchase of goods shall be creditable against any other output tax .
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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