Whether the Sponsorship or Donation of Nestle Philippines, Inc. to the "Family First Aid Guide" Poster are Deductible in Full by Nestle Philippines, Inc. for Income Tax Purposes

April 5, 1995 BIR RULING NO. 066-95 29 (h) (1) 000-00 066-95 The Philippine National Red Cross National Headquarters, Bonifacio Drive Port Area, Manila 2803 Attention: Ms . Rosa Rosal and Ms . Lina A . Aurelio Governors Gentlemen : This refers to your letter dated March 7, 1995 referring to your letter dated September 5, 1994 stating that the Philippine National Red Cross (PNRC), as an auxiliary arm of the government in its relief, shelter, health and welfare development, depends on the voluntary contributions of the general public an the support of all sectors of society; that the PNRC plans to produce a "Family First Aid Guide" poster for distribution to as many Filipino homes as possible; that it will provide a timeless and invaluable round-the-clock first aid guide which would prepare families for countless emergency situations and could even save lives; that you plan to produce one (1) million posters at a cost of P8.00 per poster or a total of P80 Million; that in view of the significance of this project, Nestle Philippines, Inc. has expressed its desire to support the project if its sponsorship could be receipted in its entirely as a tax credit in favor of their company; that in accordance with its Charter, the PNRC is exempt from the payment of duties, taxes, fees and other charges of all kinds on donations, either in cash or in kind for its disaster relief work and other Red Cross services, and in its benefits and fund raising drives all provision of law to the contrary notwithstanding; and that the Bureau of Internal Revenue, when consulted, raised no objection to the request of Nestle as long as the PNRC can secure the official approval of NEDA on the project. prcd Based on the foregoing representations, you are now requesting for a ruling to the effect that the sponsorship or donation of Nestle Philippines, Inc. to your "Family First Aid Guide" poster are deductible in full by Nestle Philippines, Inc. for income tax purposes. In reply, please be informed that under Section 29 (h) (2)(A) of the Tax code, as amended, donations to the Government of the Philippines or to any of its agencies or political subdivisions including fully-owned government corporations exclusively to finance, to provide for, or to be used in undertaking priority activities in education, health, youth and sports development, human settlements, science and culture, and in economic development according to a national priority plan to be determined by the National Economic and Development Authority (NEDA), in consultation with appropriate government agencies, including its regional development councils and private philanthropic persons and institutions shall be deductible in full, Provided, that any donation which is made to the Government or to any of its agencies or political subdivisions not in accordance with the said annual priority plan shall be subject to the limitations prescribed in Section 29(h) (1) of the Tax Code, as amended. Such being the case, and since there is no proof that the donation to be made by Nestle Philippines, Inc, to PNRC exclusively to finance or to provide funds for the "Family First Aid Guide" poster is in accordance with a national priority plan as determined by the NEDA the deductibility of the said donation shall be limited to 3% of the taxable income of said donor, in accordance with Section 29(h) (1) of the Tax Code, as amended. cdpr Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue