BIR Ruling [DA-165-05]

April 14, 2005 BIR RULING [DA-165-05] Section 34 (H) BIR Ruling No. S30-016-2004 Suy Sing Commercial Corporation 501 M. De Santos cor. Sto. Cristo St. Binondo, Manila Attention: Ms. Yelena Solis Accounting Manager Gentlemen : This refers to your letters dated February 4, 2004 and February 7, 2004 requesting for a ruling that your company can avail of the full deductibility as provided under Section 34(H) of the Tax Code of 1997. It is represented that in line with your community involvement projects, your company donated cash/assorted goods to the following: Date Donee Cash/Value of Certificate of Goods Donation No. 01/26/05 Maria Lena Buhay Memorial P5,000.00 Foundation 01/28/05 ABS-CBN Foundation, Inc. 299,762.26 RDO-039-0795-2005 P304,762.26 ========= In reply, please be informed that Section 34(H)(2)(c) of the Tax Code of 1997 provides that donations to an accredited non-government organization (NGO), which means a non-profit domestic corporation or association organized and operated exclusively for scientific, research, educational, character building and youth and sports development, health, social welfare, cultural or charitable purposes or a combination thereof, no part of the net income of which inures to the benefit of any private individual shall be deductible in full from the taxable business income of the donor depending on the donee's compliance with the level of administrative expense and utilization requirements. Otherwise, it shall be entitled only to the limited deductions as provided for under Section 34(H)(1) of the same Tax Code. Verification with Philippine Council for NGO Certification (PCNC) showed that only ABS-CBN Foundation, Inc. is accredited with PCNC. Accordingly, the donation by Suy Sing Commercial Corporation to ABS-CBN Foundation, Inc. shall be deductible in full from the gross income of Suy Sing Commercial Corporation subject to the compliance by the aforesaid exempt organizations with the level of administrative expense and utilization requirements. On the other hand, the deductibility of the donation by Suy Sing Commercial Corporation to Maria Lena Buhay Memorial Foundation shall be limited to five percent (5%) of the taxable income of the donor, in accordance with Section 34(H)(1) of the Tax Code of 1997. AacCHD 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 as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group