BIR Ruling

March 12, 1968 Mr. Florante G. Tolentino PhilPab, Inc. 303 Buendia Avenue Pasay City S i r : This refers to your letter dated March 4, 1968 requesting a ruling based on the following facts: "A foundation to help the blind is underway in its organization. The foundation will take care of funds donated to finance worthy projects through our association calculated to help the blind economically. To serve as initial funds for the foundation is a donation of no less than one hundred thousand pesos from a philanthropic industrialist. The operation of the foundation is a similar to those of existing foundations as the Magsaysay Memorial Foundation which received donations of funds from the United States and other foundations, but the principal program is charity." "In this connection we would like to inquire whether foundations of this natures are taxable or are tax free. We likewise would like to know if donations to such forms of organizations are tax free, for if they are tax free, then the donation can be utilized effectively." In reply thereto, I have the honor to inform you that based on your representations this Office believes and so holds that the proposed foundation to help the blind falls within the purview of a philanthropic organization contemplated under Sections 109 and 110 of the Tax Code, as amended by Republic Act No. 3140. Accordingly, gifts or donations made in favor of the foundation are exempt from the donor's tax. They are also exempt from the donee's tax, subject, however, to the condition that not more than thirty per centum (30%) of the gifts shall be used by the donee for administrative purposes. Moreover, not being organized for profit, the foundation shall not also be subject to business tax. As regards the foundation's liability to income tax, please be advised that this Office will issue a definite ruling on the question only upon the foundation's compliance with the requirements of Section 24, Revenue Regulations No. 2. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue