BIR Ruling [DA-535-06]

September 4, 2006 BIR RULING [DA-535-06] Section 101 (A) (3); BIR Ruling No. DA-042-01 International Service for the Acquisition of Agri-Biotech Applications, Inc . SEAsia Center, c/o IRRI DAPOBox 7777 Metro Manila Attention: Mr. Randy A. Hautea Gentlemen : This refers to your letter dated April 17, 2006 requesting, in effect, for tax exemption on the donation by International Rice Research Institute (IRRI) of a 1998 Nissan Sentra Sedan to International Service for the Acquisition of Agri-Biotech Applications (ISAAA). As represented, ISAAA is a non-profit organization registered with the SEC under SEC Registration No. A200012596 issued on September 4, 2000. It is principally engaged in scientific, educational and technology transfer activities. It delivers the benefits of new agricultural biotechnologies to the poor in developing countries, with offices at College, Laguna. IRRI is an international organization of universal character under the Multilateral Executive Agreement dated May 19, 1995, with principal offices at Los Baos, Laguna. Its primary purpose is to conduct basic research on the rice plant, on all phases of rice production, management, distribution and utilization with a view of attaining nutritive and economic advantage or benefit for the people of Asia and other major rice-growing areas through improvement in quality and quantity of rice. Under Section 2 of Republic Act No. 2707, all gifts, bequests, donations and contributions which may be granted by the IRRI to any individual or non-profit organization for educational or scientific purposes shall be exempt from the payment of the taxes imposed under Title III of the National Internal Revenue Code. Paragraph 2 of Article 5 of Presidential Decree No. 1620 provides, viz: "Article 5 Taxation and Customs 1. The provisions of existing laws or ordinances to the contrary notwithstanding, the Institute, or its successors, shall be exempt from the payment of gift, franchise, specific, percentage, real property, exchange, import, export, and all other taxes provided under existing laws or ordinances. This exemption shall extend to goods imported and owned by the Institute to be leased or used by members of its staff. HcSETI 2. All gifts bequests, donations and contributions which may be received by the Institute from any source whatsoever, or which may be granted by the Institute to any individual or non-profit organization for educational or scientific purposes, shall be exempt from the payment of the taxes imposed under Title III of the National Internal Revenue Code. . . ." In reply, please be informed that inasmuch as the donee is an educational and scientific organization, the aforementioned donation is exempt from the payment of donor's tax pursuant to Section 101(A)(3) of the Tax Code of 1997, subject to the condition that not more than thirty percent (30%) of said gift shall be used for administration purposes. Moreover, the Deed of Donation is not subject to documentary stamp tax but the acknowledgement on said deed is subject to documentary stamp tax of P15.00 imposed under Section 188 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 will be disclosed that the facts are different, then this ruling shall be considered as null and void. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service