Amendments to BIR-NEDA Regulations No. 1-81 Dated April 30, 1981, on Charitable and Other Contributions

July 8, 1982 BIR BIR-NEDA REGULATIONS NO. 001-82 SUBJECT : Amendments to BIR-NEDA Regulations No. 1-81 Dated April 30, 1981, on Charitable and Other Contributions TO : All BIR and NEDA Officers, Donors, Donees and Others Concerned SECTION 1. Section 2, paragraph R of the BIR-NEDA Regulations No. 1-81 dated April 30, 1981 is hereby amended to read as follows: "R. 'Utilization by a qualified donee' means "(a) any amount in cash or in kind (including administrative expenses) paid or utilized to accomplish one or more purposes for which it was created or organized; or "(b) any amount paid to acquire an asset used (or held for use) directly in carrying out one or more purposes for which the donee was created or organized; or "(c) any amount set aside for a specific project subject to the conditions provided for under Sec. 9 of the regulations." SECTION 2. Section 3, paragraph B of the same regulations is hereby amended to read as follows: "B. Full Deductibility. All donations in cash or in kind, except personal services, given to the following institutions or entities shall be deductible in full for income tax purposes:" SECTION 3. Sub-paragraph B (c), (iv) of Section 3 of Regulations is hereby amended to read as follows: "(iv) the assets, in the event of dissolution, would be distributed to another Domestic Corporation or Association or to the Government for a public purpose or as a competent court of justice would distribute to accomplish the general purpose for which the dissolved organization was organized: "Provided, That with respect to qualified donees prior to April 30, 1981, they shall be given until August 15, 1982 to effect amendments of their articles of incorporation to satisfy this requirement." DIETcC SECTION 4. Section 9 (b) of the same Regulations is hereby amended to read as follows: "SEC. 9. Utilization Requirements . "B. For private foundations . "(a) Administrative expenses . Administrative expenses shall not exceed 30% of total donations for the taxable year. "(b) Approval requirements for amounts set aside . Amounts set aside or to be set aside for a specific project must have the prior approval of the Commissioner of Internal Revenue in writing. Application therefor must contain the following: "(i) the nature and purpose of the specific project and the amount programmed therefor; "(ii) a detailed description of the project, including estimated costs, sources of any future funds expected to be used for completion of the project, and the location or locations (general or specific) of any physical facilities to be acquired or constructed as part of the project; and "(iii) a statement by an authorized official of the corporation or association that the amount to be set aside will actually be disbursed for the specific project within five years from the date of approval by the Commissioner of Internal Revenue, pursuant to paragraph B(b) hereof, unless the nature of the project is such that the five-year period is impracticable. "(c) Evidence of an amount set aside . Amounts set aside shall be evidenced by book entries and documents showing evidence of deposits or investments, including investment of the funds so set aside, or other documents that the Commissioner may require." SECTION 5. A new section is hereby added to the said Regulations to be known as Section 12 which read as follows: "SEC. 12. Prohibited Transactions . Any donee institution enjoying the benefits provided for under paragraph (h) of Section 30 of the National Internal Revenue Code, as amended, is prohibited from undertaking any of the following transactions: IcAaSD "(1) Lending any part of its income or property without adequate security and/or a reasonable rate of interest; "(2) Purchasing any security and/or property for more than an adequate consideration in money or money's worth; "(3) Selling any part of the security or other property for less than adequate consideration in money or money's worth; "(4) Diverting its income or transferring its property, by way of lease or sale to any member of its Board of Trustees, founder or principal officers or any member of their families or to any corporation controlled directly or indirectly by the aforesaid individuals or their families in accordance with the attribution of stock ownership under Sections 66(a) and (b) of the National Internal Revenue Code, as amended; "(5) Using any part of its property, income or seed capital for any purpose other than that for which the corporation was created or organized; or "(6) Engaging in any activity which is contrary to law, public order or public policy." SECTION 6. The original Section 12 of the said Regulations is hereby amended and renumbered as Section 12-A to read as follows: "SEC. 12-A. Cancellation of Certificates of Registration . Violation of any provision of these Regulations shall constitute a ground for the cancellation of the certificate of registration issued under Section 5 of these Regulations to the donee. If the donor is found to have participated or consented to the violation, he shall be deprived of the benefits provided under the existing laws and the corresponding tax due on the donation, including statutory increments provided in the National Internal Revenue Code, as amended, shall be assessed and collected. "The above penalties shall be in addition to any administrative or criminal penalties provided for by law or regulation." SECTION 7. These amendments shall take effect upon approval. cSaCDT (SGD.) PLACIDO L. MAPA, JR. Director-General (NEDA) (SGD.) CESAR VIRATA Minister of Finance Recommending approval: (SGD.) RAMON B. CARDENAS Deputy Director-General (NEDA) (SGD.) RUBEN B. ANCHETA Acting Commissioner (BIR)