Exemption from Donor's Tax and Deductibility of Gross Income

March 16, 1988 BIR RULING NO. 103-88 29 (h) (1) 94 156-87 320-87 103-88 Gentlemen : This refers to your letter dated October 5, 1987 requesting that the donation of two (2) parcels of land made by you in favor of the Ministry of Education, Culture and Sports (MECS) through the Division Office, Third District, Caloocan City, Metro Manila and the Catholic Diocese of Malolos through the Our Lady of Rosary Parish, Valenzuela, Metro Manila be exempt from donor's tax and deductible from your gross income. It appears that on January 30, 1987, you executed two (2) Deeds of Donation in favor of: (1) the Ministry of Education, Culture and Sports (MECS) through Division Office, 3rd District, Caloocan City; and (2) the Catholic Diocese of Malolos through Our Lady of Rosary Parish, Valenzuela, Metro Manila covering two (2) parcels of land together with the buildings and improvements thereon situated in Barangay Bagbagin, Valenzuela, Metro Manila and covered by TCT Nos. T-137263 and T-137262 both of the Registry of Deeds of Caloocan City; and that the aforementioned donations are for the educational and spiritual upliftment of Barangay Bagbagin, Valenzuela, Metro Manila. In reply, please be informed that pursuant to Section 94(a)(2) & (3) 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 the said Government; and in favor of a religious corporation by a resident shall be exempt from the donor's tax provided that in the case of donations made in favor of a religious corporation, not more than thirty (30%) per centum of said gifts shall be used by such donee for administration purposes. Moreover, Section 29(h)(1) of the Tax Code, as amended, provides that contributions or 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 for exclusively public purposes, or to domestic corporations or associations organized and operated exclusively for religious purposes are deductible for income tax purposes only to an amount not in excess of 6% in the case of an individual donor and 3% in the case of a corporate donor of the donor's or contributor's taxable income derived from business as computed without the benefit of said donations. aisadc In view thereof, this Office is of the opinion as it hereby holds that your aforementioned donations are exempt from the payment of donor's tax, provided that in the case of the donation to the Catholic Diocese of Malolos, not more than thirty (30%) per centum of said gift shall be used by such donee for administration purposes. Likewise, said gifts are deductible in an amount not in excess of 3%, of your taxable income derived from business as computed without the benefit of said donations. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner