Donations from Private Entities in connection with a Book Collection Development Program are Exempt from Donor's tax and Deductible for Income Tax Purposes

April 3, 1991 BIR RULING NO. 056-91 94 (a) (2) 29 (h) (1) 039-91 056-91 Gentlemen : This refers to your letter dated March 21, 1991, requesting in effect a ruling as to whether or not donations from private entities in connection with your Book Collection Development Program are exempt from the donor's tax and deductible for income tax purposes. It is represented that in connection with your Book Collection Development Program, you are soliciting donations from private entities for the purpose of upgrading and complementing your 32 barangays with books to encourage education among the youth; that inasmuch as you would like to get a positive response from your solicitation, you are contemplating on using Section 29 (h) (1) and Section 94 (a) (2) of the Tax Code, as amended; and that before you come out with your solicitation letter, you would like first to be cleared on said provisions. In reply, please be informed that under Section 94 (a) (2) of the Tax Code, as amended, gifts made to or for the use of the National Government or any entity, created by any of its agencies which is not conducted for profit, or to any political subdivision of said Government, as in the case of the Municipality of Makati, shall be exempt from the donor's tax provided in Chapter 2 of the same Code. Accordingly, donations to be made in your favor from private entities in connection with your Book Collection Development Program for the purpose of upgrading and complementing your 32 barangays with books to encourage education among the youth are exempt from the donor's tax imposed under Section 29 (h) (1) of the Tax Code, as amended. Moreover, under Section 29(h)(1) of the Tax Code, as amended, gifts 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, as in the case of the Municipality of Makati, for exclusively public purposes shall be allowed as deductions in computing taxable income subject to tax under Section 21(a), 24(a), (b) and (c); and 25 (a) (1) of the Tax Code 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 the said donations. Such being the case, donations to be made in your favor pursuant to your aforesaid Book Collection Development Program are deductible from the donor's taxable income derived from business as computed without the benefit of said donation for income tax purposes in an amount not exceeding 6% in the case of an individual donor; and 3% in the case of a corporate donor. cdtech Very truly yours, (SGD.) JOSE U. ONG Commissioner