BIR Ruling [DA-136-96]

April 2, 1996 BIR RULING [DA-136-96] MEMORANDUM FOR : Hon. Roberto F. De Ocampo Secretary of Finance FROM : Commissioner Liwayway Vinzons-Chato Bureau of Internal Revenue RE : House Bill No. 646 entitled "An Act Creating the Mindanao Development Authority Defining its Powers and Functions and Appropriating Funds Thereof" DATE : February 12, 1996 I. Highlight: Section 19 of House Bill No. 646 provides as follows: "Sec. 19. Donations and Gifts . The Authority shall have the right to receive donations or bequests which shall be utilized only for the implementation of the programs and projects of the Authority: Provided, That programs and projects of the Authority financed by foreign grants or financial assistance with national security implications shall be approved by the national agency concerned which shall be deemed to have approved the same if it fails to act on the request from the Authority for such approval within thirty (30) days from receipt thereof. Any such donations or bequests shall be exempt from the payment of gift taxes and the full amount of such donations or bequests shall be deductible from the gross income of the donor for the year during which the same is made." II. COMMENT: The proposed exemption of the Mindanao Development Authority from the payment of gift taxes and the full deductibility of the subject donations or bequests from the gross income of the donor for the year during which the same is made should be in consonance with Section 29 of House Bill No. 6060, otherwise known as the Tax Reform Package, which provides as follows: cIHCST "(h) Contributions. (1) In general. Contributions or gifts in the form of cash, land, building and other infrastructures actually paid or made within the taxable year to, or for the use of the Government of the Philippines or any of its agencies or any political subdivision thereof for exclusively public purposes, or to non-government organization duly accredited by an appropriate government or private agency to be prescribed in regulations promulgated by the Secretary of Finance in an amount not in excess of 6% in the case of an individual, and 3% in the case of a corporation, of the taxpayer's taxable income derived from business as computed without the benefit of this and the following subparagraphs." Under the said Section 29 of House Bill No. 6060, the provision on full deductibility of donations to the government or to any of its agencies or instrumentalities as provided for in Section 29 (2) (A) of the Tax Code, as amended, is deleted. (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue