Exemption from Taxes on Donations Received and Importation of Books, Educational Materials and Equipment

May 10, 1990 BIR RULING NO. 075-90 101 (a) & 94 (a) (3) 10-88 075-90 Gentlemen : This refers to your letter dated March 1, 1990 requesting exemption from taxes on donations you receive as well as your importation of books, educational materials and equipment. cdta It is represented that you are a non-stock, non-profit educational institution and that you imported laboratory equipment and scientific and technical books related to course offerings in veterinary medicine, engineering (mechanical, electrical and agricultural) agriculture and forestry which will be used exclusively for instructional and research purposes; and that your school also receives donations locally and from abroad. In reply, please be informed that based on the foregoing facts, Gregorio Araneta University Foundation is exempt from taxes and duties and consequently from the Value-added tax on its importation of the aforesaid laboratory equipment and scientific and technical books which will be used actually, directly and exclusively for instructional/educational purposes pursuant to Article XIV, Section 4, paragraph 3 of the 1987 Constitution stating: "(3) All revenues and assets of non-stock, non-profit educational institutions used actually, directly and exclusively for educational purposes shall be exempt from taxes and duties, . . ." This serves as authority for the release of the said importation from Customs custody without the payment of value-added tax. However, in case any of the aforesaid articles are subsequently sold, transferred or exchanged in the Philippines to non-exempt persons or entities, the purchasers, transferees or recipients shall be considered the importers thereof, in which case, they shall be liable for the value-added tax on each importation. (Section 101(b), NIRC) With respect to your inquiry as to the exemption from donor's tax on donations made in your favor, please be informed that pursuant to Section 94(a)(3) of the Tax Code, as amended, gifts in favor of an educational and/or charitable, religious, cultural or social welfare corporation or institution are exempt from donor's tax provided that not more than thirty per centum (30%) of said gifts shall be used by such donee for administration purposes. Such being the case, the aforementioned donation is likewise exempt from the payment of donor's tax. Very truly yours, (SGD.) JOSE U. ONG Commissioner