Deductibility of a Donation from the Gross Income to the Extent of 3% of Corporate Taxable Income

March 28, 1988 BIR RULING NO. 123-88 145 (b) 92 000-00 123-88 Gentlemen : This refers to your letter dated March 9, 1988 stating that you are a BOI-registered enterprises with refining facilities at Malaya, Pililia, Rizal and engaged in the manufacture of lubricating oil basestocks, the principal components of lubricating oils and greases; that the production process utilizes a highly viscous crude oil residue as raw material, out of which lubricating oil basestocks of various grades are extracted, the result containing asphalt components which could be processed into commercial grade asphalt; that since you are not yet equipped to produce and market asphalt commercial quantities, the asphalt components of the residue ends up as bunker fuel oil; that you are requested by the Department of Public Works and Highways thru the Rizal District Engineer's Office to donate 200 drums of asphalt for the repairs and paving of a portion of the road at Barangay Malaya, Pililia, Rizal. You now request that said 200 drums of asphalt be exempt from payment of the ad valorem tax. In reply, please be informed that your request for tax exemption cannot be granted for lack of legal basis. However, said donation is deductible from your gross income to the extent of 3% of your corporate taxable income derived from business as computed without the benefit of this and other deductions pursuant to Section 29(h)(1) of the Tax Code, as amended. aisadc Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner