Exemption from Donor's Gift Tax

July 23, 1979 BIR RULING NO. 065-79 Exemption from donor's gift tax This refers to your letter dated May 3, 1979 requesting confirmation of your opinion to the effect that donations made in favor of the University of Santo Tomas are exempt from the payment of donor's gift tax and that said donations are deductible in full from the gross income of the donor pursuant to Sections 123 and 30(h) of the Internal Revenue Code of 1977, as amended. It appears that the University of Santo Tomas is a non-profit educational and charitable institution duly organized and existing under the laws of the Philippines; that it is a non-stock entity, paying no dividends, governed by trustees who receive no compensation, and devoting all its income, whether student's fees or gifts, donations, subsidies or other forms of philanthropy, to the accomplishment and promotion of the purposes enumerated in its Articles of Incorporation. In reply thereto, I have the honor to inform you that as the donee is a non-profit educational and charitable institution, donations made in its favor both for educational and charitable purposes, are exempt from the payment of donor's gift tax pursuant to Section 123(a)(3) of the National Internal Revenue Code of 1977, as amended subject to the condition that not more than 30% of said gifts are used for administration purposes. Considering that University is recognized by the Government, the donations for educational purpose are deductible in full from the gross income of the donor under Section 30 (h)(1) of the same Code, provided that the donations are not for the payment or granting of a salary increase, bonus, or personal benefits to any of its stockholders, school officials, faculty and personnel. The donations for charitable purposes are also deductible in full from the gross income of the donor, subject to the condition that not more than 30% of said gifts shall be used by the donee for administration purposes. (Sec. 30(h)(21), Tax Code)