BIR Ruling [DA-043-05]

January 28, 2005 BIR RULING [DA-043-05] 101 (B) (1); 371-2000 National Economic and Development Authority NEDA sa Pasig, Amber Avenue, Pasig City Attention: Ms. Margarita R. Songco Assistant Director-General and Chairperson, SDC-Technical Board Gentlemen : This refers to the 1st Indorsement of the Chief Audit Information, Tax Exemption and Incentives Division, BIR, National Office dated January 21, 2004 relative to your request for exemption from the value-added tax of the donated medicines, food, clothing, appliances and financial assistance for livelihood, housing, education, trainings and water system in favor of the Gawad Kalinga Program (GKP). It is represented that GKP has been assisting the government in its poverty reduction program; that the President herself gave a grant of P30 million from her Social Fund to the Program to build 1,000 homes in 70 sites all over the country in June 2002; and that GKP also receives donations from other countries in the form of medicines, food, clothing, appliances and financial assistance for livelihood, housing, education, trainings and water systems. In reply, please be informed that under Section 101(B)(1) of the Tax Code of 1997, "gifts made by a non-resident to or for the use of the National Government or any entity created by any of its agencies which is not conducted for profit, or to any political subdivision of the Government" shall be exempt from donor's tax. Accordingly, the subject donation from foreign countries consisting of medicines, food, clothing, appliances and financial assistance for livelihood, housing, education, trainings and water system in favor of the GKP, is exempt from donor's tax. However, the subject importation in the form of donations shall be subject to the 10% VAT pursuant to Section 107(A) of the Tax Code of 1997. (BIR Ruling No. 371-2000 dated October 25, 2000) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation it will be disclosed that the facts are different, then this ruling shall be considered null and void. HcTSDa Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group