Exemption from the Donor's Gift Tax

May 10, 1990 BIR RULING NO. 077-90 29 (h) 019-90 077-90 S i r : This refers to your 1st Indorsement dated November 27, 1989 requesting this Bureau to issue tax exemption in favor of donors or contributors who would contribute to that Municipality which contributions shall be utilized in the construction of a "Multi-Purpose People's Center." "The building, will be utilized as offices and conference rooms for livelihood seminars, medical clinic, non-government organization meetings and for storage of equipment of the citizens of Muntinlupa. The building will be administered by the different offices of the municipal government. cdt The above request is contained in Resolution No. 89-125 passed by the Sangguniang Bayan of Muntinlupa on November 13, 1989. In reply, please be informed that above donations and contributions are exempt from the donor's gift tax, pursuant to Section 94(a)(2) of the Tax Code. As regards the deductibility of said donations for income tax purposes under Section 29(b)(2)(A) of the Tax Code, the same are deductible in full if they are given to the Government or to any of its agencies or political subdivision to be used exclusively to finance or to provide for undertaking priority activities in education, health, youth and sports development, human settlements, science, culture and economic development, as described in the national priority plan prepared by NEDA. (Sec. 3, B, BIR-NEDA Regulations No. 1-81) Undoubtedly, the construction of your multi-purpose center to be used for the purpose indicated above is in furtherance of said priority activities, especially in health and in economic development, hence, the funds utilized for these purposes may be considered used to undertake, said activities. Such being the case, the above donations to be utilized for said purposes are deductible in full for income tax purposes if they are covered by the national priority plan of the NEDA. If the donations are not in accordance with said plan, the same are deductible 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 this deduction, pursuant to Section 29(h)(1) of the Tax Code. cdta Very truly yours, (SGD.) JOSE U. ONG Commissioner