Hoese Bill No. 1544 "An Act Granting Tax Incentives To Broadcast and Print Media Devoting Air Time and Space to Education, As Well As to Sponsors Supporting Such Programs, and for Other Purposes"

January 20, 1999 BIR RULING [DA-028-99] MEMORANDUM FOR : Hon. Bellaflor J. Angara-Castillo Committee on Public Information FROM : Beethoven L. Rualo Commissioner of Internal Revenue SUBJECT : HOUSE BILL NO. 1544 "An Act Granting Tax Incentives To Broadcast and Print Media Devoting Air Time and Space to Education, As Well As to Sponsors Supporting Such Programs, and for Other Purposes" HOUSE BILL NO. 510 "An Act Granting Tax Incentives to Broadcast and Print Media Devoting Air Time and Space to Education as well as to Sponsors Supporting Such Programs and for Other Purposes" HOUSE BILL NO. 497 "An Act Providing Incentives for Community Newspapers With an Educational Trust, and for Other Purposes" DATE : December 8, 1988 Features of House Bill No . 1544 Exemption of the importation of machinery, equipment, tools for production, spare parts, supplies, materials and transportation and communication facilities to be used actually, directly, and exclusively for educational purposes by media producers and publishers from duty and internal revenue tax. LLphil Tax deductibility of any amount paid and contributed for educational programs and publications by any individual or corporation which shall not exceed ten percent (10%) of their respective annual income computed without the benefit of any tax incentives under existing law. The net income derived from educational programs and publications shall be tax exempt for five (5%) years from the start of its initial operation or until the producer and publisher shall have attained reasonable return of their investment. Thereafter, no part of the net income which inures to the benefit of the producer or publisher in an amount not in excess of twenty-five percent (25%) of the taxable income derived from the program or publication shall be allowed. The excess amount of the net income shall be devoted for the enhancement of the educational program and for other educational purposes. All expenses incurred in the production of commercials and advertisements with educational impact, approved by the Secretary of Education, Culture and Sports or any equivalent government agency, endorsed by the Kapisanan ng mga Broadkaster ng Pilipinas, Publisher's Association of the Philippines, Philippine Press Institute, and other media organization, shall enjoy tax deduction of not more than ten percent (10%) of the gross operating expenses of the advertisers or sponsors: Provided, That these commercials and advertisements are actually delivered to the general public. Broadcast and print media shall give ten percent (10%) lower air time rates and cost of space for every paid feature of production or publication with educational content, as approved and certified by the Secretary of Education, Culture and Sports or any equivalent government agency and endorsed by broadcast and print recognized organizations, the difference from the regular rate shall be chargeable to the value-added tax accruable. Features of House Bill No . 510 The feature of House Bill No. 510 are practically the same as House Bill No. 1544. Features of House Bill No . 497 Community newspapers with an educational thrust shall be entitled to the following incentives: (a) For purposes of availing credit, the community newspaper shall be listed as a small scale enterprise and therefore entitled to all incentives and benefits due a small scale enterprise (b) In case the publisher is a cooperative, the community newspaper shall additionally enjoy the incentives available under the law on cooperatives (c) . . . (d) . . . (e) . . . COMMENTS : HOUSE BILL NOS . 1544 AND 510 While the purpose of the bill is laudable, nevertheless since the BIR can hardly meet its revenue collection target at this time of an economic and financial crisis, the grant of tax incentives to media programs and publications, as well as to their respective advertisers and sponsors, with educational thrust will further reduce the sources of revenue of the BIR. Likewise, considering that there are pronouncements from our legislators that they are not inclined to impose new taxes at this time to ease the people of additional tax burdens, there is therefore no other source from which the BIR can compensate from such loss of revenue as a result of the grant of such tax incentives to broadcast and print media devoting airtime and space to education. In view thereof, this Office does not recommend the passage of said bill. HOUSE BILL NO . 497 This Office does not likewise recommend the passage of this bill as it will further reduce the revenue sources of the BIR with no other source from which it can compensate such loss of revenue as a result of the grant of tax incentives to community newspapers. cdtech (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue