BIR Ruling No. 153-84

September 12, 1984 BIR RULING NO. 153-84 30-h-000-00-153-84 Gentlemen : This refers to your letter dated July 18, 1984 stating that you are devising a scheme to generate 8 million pesos to fund a Traffic Education Campaign that intends to help save the country up to 4.5 million pesos annually; that the scheme calls for companies to donate to the National Government 8 million pesos, but as motivation, the donations will be considered as advance tax payments by the companies, deductible from future tax payments. You now seek our opinion whether the above proposed scheme of considering the donations as advance tax payments by the donor companies and deductible from future tax payments can be made feasible with our endorsement and subsequent approval by the President of the Philippines. In reply, please be informed that internal revenue taxes are payable directly to the national government through the Bureau of Internal Revenue and its authorized collecting agencies. While your proposed scheme to generate funds for traffic education campaign can be made feasible by soliciting gifts from various companies, there is no law which authorizes that such donations can be considered as advance tax payments. However, as an incentive to the donor-contributor, Section 123(a)(2) of the Tax Code as amended, provides that gifts made 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 the donor's tax. Moreover, for income tax purposes, contributions or gifts actually paid or made within the taxable year to or for the use of the Government of the Philippines or any of its agencies or any political subdivision thereof for exclusively public purposes e.g. traffic education campaign, shall be deductible 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 or contributor's taxable net income as computed without the benefit of said contribution or donation pursuant to Section 30(h) of the Tax Code, as amended. aisadc Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner