Exemption from the Payment of Donor's Tax

May 23, 1989 BIR RULING NO. 109-89 29 (h) (1) 94 (a) (3) 397-88 109-89 Gentlemen : This refers to your letter dated April 19, 1989 requesting exemption from the payment of donor's tax of the donation made by Grace Christian Foundation, Inc., consisting of nine (9) parcels of land, covered by TCT Nos. 179553, 212939, 212940, 212941, 212942, 235096, 235097, 235098 and 235099, situated in Quezon City in favor of Grace Christian High School by virtue of a Deed of Donation executed on April 19, 1989. cd It is represented that the Grace Christian High School is a non-stock, non-profit educational institution, paying no dividends, governed by trustees who received 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, 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 the donor's tax provided that not more than thirty 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 gifts actually paid or made within the taxable year to domestic corporations for educational purposes, among others, 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 taxable income derived from business as computed without the benefit of said donation. In view thereof, this Office is of the opinion as it hereby holds that the aforementioned donations are exempt from the payment of the donor's tax. cdt Very truly yours, (SGD.) JOSE U. ONG Commissioner