BIR Ruling [DA-060-99]

February 5, 1999 BIR RULING [DA-060-99] International Marinelife Philippines 17 San Juan St., Bo. Kapitolyo Pasig City Attention: Ms . Daliles S . Pratt Treasurer Gentlemen : This refers to your letter dated October 13, 1998 requesting on behalf of your officers and employees for a ruling as to whether the compensation in the form of allowances, i.e., transportation, living quarters, meal allowances and other facilities which are of relatively of small value received from donations coming directly from abroad is exempt from Philippine tax pursuant to Section 2.78.1 of Revenue Regulations No. 2-98. cdti It is represented that the International Marinelife Alliance Philippines (IMA, Phils.) is a non-stock, non-government organization whose primary concern is the protection of living marine resources and the conservation of their habitat; that IMA, Phils. is the branch office of International Marinelife Alliance (IMA) which was founded and duly registered in 1985 in the State of Massachusetts, U.S.A. for the following purposes: "1) to help conserve bio-diversity, protect marine environments and promote the sustainable use of marine resources around the world for the benefit of the local people; "2) to provide education toward that end, to collect, disseminate, and publish relevant articles and works, as well as to train people to reform practices destructive to marine life and habitats; and "3) to receive donations for the furtherance of the same." that IMA advocates judicious utilization of marine resources and the conservation of coral reefs in underdeveloped countries; that it is the primary force behind the on-going initiatives in Indo-Pacific region to develop strategies to combat the growing threat of cyanide fishing; that in the Philippines, IMA focuses on community-based coastal resources management programs design to catalyze the transformation of stake holders into resource managers; that in 1997, IMA, Phils. was able to mobilize 75,000 person-volunteers that include teachers, students, fisherfolks, professionals, NGO workers, politicians, law enforcers, civic leaders, boys and girls scouts, divers, beach resort owners, government employees in the 11th International Coastal Cleanup (ICC); that ICC is an initiative of the Center for Marine Conservation (CMC) in Washington, D.C. and is coordinated in the Philippines by IMA; that IMA, Phils. is internationally funded specifically from USAID and from various donations around the world which includes the countries where it has its local offices or headquarters; that the grant coming from USAID and donations locally are being used to finance the project which IMA, Phils. regularly undertakes such as but not limited to publication of educational articles relating to marine life conservation, coastal cleanup, educational training, etc.; that its local officers and employees in the Philippines solicit donations from various individuals and NGOs abroad which are being coursed through IMA, Phils. and IMA, Mass. and are being released in the form of allowances which include diving gears, transportation, living quarters, meal allowances and other facilities which are relatively of small value; that said facilities are being furnished and utilized by the said employees and officers in order to pursue the object for which IMA, Phils. was organized; and that it is your opinion that such "compensation and allowances" which are being allotted and paid to the local officers and employees directly from donations abroad through IMA, Mass. are exempt from Philippine income tax and consequently from the withholding tax. Hence, this request. In reply, since the monthly financial support in the form of various allowances thus mentioned being allocated by the various donors and NGOs abroad and received by your officers and employees through IMA, Mass. and IMA, Phils. are not compensation and/or salary per se, but donations made by individuals and NGOs in the U.S.A. specifically to sustain the purpose for which IMA was organized and from which the officers and employees receive such kind of benefits to sustain them to such endeavors, said financial support are not, therefore, subject to Philippine income tax prescribed under Section 24(A)(1)(c) of the Tax Code of 1997 and consequently to withholding tax under Section 78 of the same Tax Code. (BIR Ruling No. 015-94 dated January 12, 1994) However, the net gift or donation to each and every local officer and employee by each and every individual donor shall be subject to donors tax pursuant to Section 99(B) of the Tax Code of 1997. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it shall be disclosed that the facts are different, then this ruling shall be considered null and void. prcd Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group