Exemption from Donor's Gift Tax — Social Welfare Organization

December 27, 1979 BIR RULING NO. 143-79 Exemption from donor's gift tax social welfare organization This is reply to your letter dated April 6, 1979 requesting clarification on the following: "(1) That donations made to the Boy Scouts of the Philippines, Rizal Council, shall be considered exempt from the donor's tax; and "(2) That donations made to the Boy Scouts of the Philippines, Rizal Council, can be reflected by the donor as tax deductible amounts in their income tax." cd Section 3 of Commonwealth Act No. 111 creating the Boy Scouts of the Philippines (BSP) provides that "the purpose of this corporation shall be to promote, through organization, and cooperation with other agencies, the ability of boys to do things for themselves and others, to train them in scoutcraft, and to teach them patriotism, courage, self-reliance, and kindred virtues, using the methods which are not in common use by boy scouts." Moreover, the whereas clause of Presidential Decree No. 460 states that "the scouts through their recent involvement in civic and community development projects, undertaken on their own initiative and with extra-ordinary enthusiasm and zeal have demonstrated that, given the opportunity and property motivated leadership, they can become the new nation builders and contribute effectively to the improvement of our society and the development of our nation." Since the Boy Scouts of the Philippines is a social welfare organization, donations to the Rizal Council of said organization are exempt from the donor's gift tax, in accordance with Section 123(a)(3) of the Tax Code. BSP is considered as a social welfare organization which is an organization generally engaged in promoting the welfare of mankind such as the improvement of the living conditions and standard of members of a community, no part of the net income of which inures to the benefit of any private stockholder or individual (Revenue Regulations No. 8-74, dated September 24, 1974). Furthermore, for income tax purpose, such donations shall be deductible in full from the gross income of the donor. (Sec. 30(b)(21), Tax Code of 1977). The exemption from the donor's gift tax and the deductibility in full of the donation from the gross income of the donor are subject to the condition that not more than 30% of the gifts shall be used by the donee for administration purposes. aisa dc