Hon. Steve Chiongbian Solon

October 22, 2018 BIR RULING NO. 1290-18 Sec. 101 (B) (1) of the Tax Code of 1997; BIR Ruling No. 656-12 Hon. Steve Chiongbian Solon Governor Province of Sarangani JLC building, Provincial Capitol Complex Alabel, Sarangani Province Sir : This refers to your letter dated December 2, 2014 duly indorsed by Revenue Region No. 18-Koronadal City requesting tax exemption of the Deed of Donation executed by the Starkey Hearing Foundation and the Province of Sarangani. Documents submitted disclosed that the Provincial Government of Sarangani, is a local government unit created by law, organized and existing under the laws of the Republic of the Philippines; that a Deed of Donation was executed on September 29, 2014 and October 20, 2014 by the Starkey Hearing Foundation, a charity organization and in good standing under the laws of Minnesota, with postal address at 6700 Washington Avenue, South, Eden Prairie, Minnesota, USA, in favor of Provincial Government of Sarangani as donee for the following equipment to be used for the hearing mission: QUANTITY PART DESCRIPTION 11,000 Ear Molds 170,000 Hearing Aid Batteries Model 13a 50,000 Hearing Aid Batteries Model 675a 5,000 Medals 14,000 Hearing Aids-Mixed Powers 5,000 Blue Pouches 95% Polyester + 5% Nylon 150 Earmold Model 3680 150 Earmold Model 1596 150 Earmold Model 9781 150 Earmold Model 1600 3 Tube Cutter 3 Tube Expander 3 Scissor 3 Apron 300 Pre-bent Tubes Size 0.130 3 Poker 3 Reamer 3 Wire Puller 3 Instant Glue 3 Otoscope + 50 Specula 3 Syringe (60 cc) 3 Nasal Decongestants 3 Ear Swabs 3 Toothbrush 3 Blower Bulbs 3 Ear Cleaning Curettes 3 Pen Light + Tips 9 Emesis Basin 3 Black Marker 3 Red Marker 3 Notepad 6 Pens 12 Batteries AA 24 Batteries AAA 3 Headlamp 150 Toothpicks 12 Facial Tissue 3 Battery Tester 90 Otoblocks Size #2 90 Otoblocks Size #1 300 Plastic Bags 5" x 7" 3 Dreve AK Impression Material (400g tubs x 2) 6 Impression Syringes 3 Stethoscope 3 Alcohol Swabs bundle 100 singles use packets 120 Hearing Aid Batteries Size 13 120 Hearing Aid Batteries Size 675 that the shipment with airway bill No. 609264642220 arrived on November 17, 2014 and was released on November 20, 2014 after posting cash bond with the Bureau of Customs in the amount of P421,543.00. 1 In reply, please be informed that pursuant to Section 101 (B) (1) of the Tax Code of 1997, gifts made by a non-resident individual or organization 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 said Government shall be exempt from donor's tax. Considering that the above donation was made by a non-resident organization, the Starkey Hearing Foundation in favor of the Provincial Government of Sarangani, a local government unit created by law, organized and existing under the laws of the Republic of the Philippines, the aforementioned donation is exempt from the payment of donor's tax pursuant to Section 101 (B) (1) of the Tax Code of 1997. Moreover, the deed of donation is likewise not subject to the documentary stamp tax prescribed under Section 196 of the Tax Code of 1997, but only to the documentary stamp tax of P15.00 imposed under Section 188 of the same Tax Code. (BIR Ruling No. 656-12 dated December 21, 2012) However, Section 109 of the same Code which enumerates the transactions exempt from VAT does not include importation of articles/goods consigned to any political subdivisions of the Government. Accordingly, since the donated hearing aid equipment will come from abroad, the importation thereof shall be subject to the 12% VAT based on the total value used by the Bureau of Customs in determining tariff and customs duties, excise taxes, if any, and other charges, such tax to be paid by the importer prior to the release of the medical equipment from customs custody pursuant to Section 107 (A) of the Tax Code of 1997. Lastly, as to exemption from customs duties and other levies on its importation, this Office is in no position to rule on the matter, the same being under the jurisdiction of the Bureau of Customs. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue Footnotes 1. P93,429.00 for import duty and P333,114.00 for BIR Taxes.