Taxability of Donations of by International Human Assistance Programs to Sorsogon Crop Diversification Programs

September 17, 1986 BIR RULING NO. 176-86 120 000-00 176-86 Gentlemen : This refers to your letter dated January 16, 1985 requesting a ruling as to whether or not the donations to be made by the International Human Assistance Programs, Inc.,IHAP, of all its assets and properties acquired in the course of implementing its intercropping program in favor of the Sorsogon Crop Diversification Programs, Inc.,(SCDP) is subject to tax. It is represented that IHAP is a non-stock, non-profit development assistance agency operating in the Philippines and twelve (12) other developing countries in Asia and Africa in an effort to assist and raise to a subsistence level the standard of living of the poorest of the poor; that in the Philippines, due to the nature and thrust of its development work, IHAP is tax exempt by virtue of R.A. No. 3538 and P.D. No. 1129; that IHAP with the assistance of USAID, has for the last four years and four months implemented an intercropping program in Sorsogon involving 750 farmer-cooperators; that the cooperators organized the Sorsogon Crop Diversification Programs, Inc., which is a stock corporation registered with SEC for purposes of furthering its goal and objectives of the program and institutionalizing the activity; and that outside assistance is being phased-out and IHAP is leaving to the farmer-based SCDP all the assets and properties acquired in the course of implementing the program. In reply thereto, I have the honor to inform you the Presidential Decree No. 1955 repealed all exemptions from or any preferential treatment in the payment of duties, taxes, fees, imposts and other charges, except those covered under Section 1 thereof, effective October 10, 1984. Since the International Human Assistance Programs, Inc. is not an entity covered under the provisions of Section 1 of the said Decree, it follows that the tax exemption which it enjoyed before under R.A. 3538 and P.D. 1129 ceased beginning October 10, 1984. Accordingly, the donation of all the assets and properties of IHAP in favor of SCDP is subject to the donor's tax under Section 120 of the Tax Code computed on the basis of the total net gifts made during the calendar year in accordance with the rates prescribed under Section 121 of the Tax Code, as amended. However, if the total net gifts during the year does not exceed One thousand pesos (P1,000.00), the same is exempt form the donor's tax. cdta Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner