BIR Ruling [DA-206-96]

June 21, 1996 BIR RULING [DA-206-96] PNB Foundation, Inc. 2/F PNB Financial Center Roxas Boulevard Pasay City Attention: Mr . Francisco S . Magsajo, Jr . President Gentlemen : This refers to your request for a ruling to the effect that donations in favor of the PNB Foundation, Inc. are not subject to the donor's tax; and that said donations are fully deductible from the donor's gross income, for income tax purposes. Documentary evidence submitted disclosed that the PNB Foundation, Inc. is a non-stock, non-profit domestic corporation, organized and registered with the Securities and Exchange Commission for the following purposes: 1. To promote, carry on, conduct and encourage the advancement and development of education and training in the fields of industrial, technological and agricultural sciences and related activities designed to contribute to maximization of economic productivity, community development, wider distribution of social and economic values, with a view to directly assisting the beneficiaries in establishing and maintaining their own livelihood activities to achieve economic independence and improvement through financial aid and support, grants, scholarships, sponsorship, donations and other forms of assistance from the Foundation; that it is governed by trustees who receive no compensation; and that no part of its funds and income shall inure to the benefit of any of its members. In reply, please be informed that if as represented, the PNB Foundation, Inc. is a corporation organized and operated for scientific, charitable, social welfare and educational purposes, the donations to PNB Foundation, Inc. are exempt from the payment of donor's tax pursuant to Section 94 (a) (3) of the Tax Code, as amended, subject to the condition that not more than 30% of the said gifts shall be used by the donee Foundation for administration purposes. Under Section 29 (h) (2) (C) of the Tax Code, as amended by Batas Pambansa Blg. 45, as implemented by BIR-NEDA Regulations No. 1-81, as amended by Revenue Regulations Nos. 1-82 and 10-82, donations to a private foundation which means a non-profit domestic corporation 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. On the other hand, under Section 29 of the Tax Code as amended by Republic Act No. 7496 (An Act Adopting the Simplified Net Income Taxation Scheme [SNITS] for the Self-Employed and Professionals Engaged in the Practice of Their Profession), and as implemented by Revenue Regulations No. 2-93, effective July 28, 1992, individuals engaged in business or practice of profession shall only be allowed as deduction from gross income, among others, contributions made to the Government and accredited relief organizations for the rehabilitation of calamity-stricken areas declared by the President . Pure compensation income earners are allowed to deduct from their gross compensation income only their personal and additional exemptions. (Sec. 29, Tax Code) In view thereof, this Office is of the opinion as it hereby holds that for income tax purposes, contributions and donations in favor of the PNB. Foundation, Inc. by individual donors/contributors shall not be deductible from their gross income; and that since PNB Foundation, Inc. is a private foundation organized and operated for scientific, charitable, social welfare and educational purposes, contributions and donations in its favor shall be deductible in full from the gross income of corporate donors/contributors. (BIR Ruling No. 517-A-93 dated December 23, 1993) 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. cdtech Very truly yours, ALICIA P. CLEMENO Assistant Commissioner Legal Service