Importations by an Orphanage of Relief Goods and Equipment from Foreign Institutions is Subject to 10% VAT but Exempt from Donor's Tax

June 18, 1991 BIR RULING NO. 110-91 101 (a) 167-88 110-91 Gentlemen : This refers to your letter dated January 14, 1991 requesting in behalf of your client, Our Blessed Mother of Victory Mission Foundation, Inc. (OBMVMFI), Pasonanca, Zamboanga City exemption from customs duties and value-added tax on its importation of relief goods and equipment from foreign institutions. It is represented that Our Blessed Mother of Victory Mission Foundation, Inc. (OBMVMFI) is a non-profit orphanage organized for the purpose of promoting the social and economic welfare of less fortunate children such as the out of school youth, abandoned and neglected children living in the streets; that OBMVMFI was issued a certificate of exemption as a corporation organized for social welfare purposes dated September 29, 1988; that it is also registered in accordance with the provisions of BIR-NEDA Regulations No. 1-81; that the foundation shall be maintained through donations and contributions from individuals, corporations and government agencies; and that no part of its net income shall insure to the benefit of any member. In reply, please be informed that the above request cannot be granted for lack of legal basis. OBMVMFI's importations of relief goods and equipment from foreign institutions, is subject to 10% VAT based on the total value used by the Bureau of Customs in determining tariff and customs duties, plus customs duties, excise tax, if any, and other charges, such tax to be paid by the importer prior to the release of such goods from customs custody pursuant to Sec. 101 (a) of the Tax Code, as amended by E.O. No. 273. However, said importation, is exempt from the donor's tax subject to the condition that not more than 30% of said gift shall be used by the donee foundation for administration purposes, in accordance with Section 94 (b) (2) in relation to Section 98 both of the Tax Code, as amended. Very truly yours, (SGD.) JOSE U. ONG Commissioner