Taxability of the Proceeds Derived by the PNRC

October 30, 1989 BIR RULING NO. 220-89 26 (g) 428-88 220-89 S i r : This refers to your letter dated September 21, 1989, in effect, requesting a ruling on the taxability of the proceeds to be derived by the Philippine National Red Cross (PNRC) in sponsoring a boxing promotion entitled the "Dual-duel" on October 11, 1989 at the Araneta Coliseum. It appears that PNRC is the duly constituted voluntary organization officially designated to assist the Republic of the Philippines in discharging the obligations set forth in the Geneva Conventions and to perform such other duties as are incumbent upon a National Red Cross Society (P.D. No. 1643); that in the 39 years of its existence as a National Red Cross Society, the PNRC has proved itself as an effective auxiliary to the government in the field of relief, health and welfare; that P.D. No. 1643 directs that PNRC shall be financed primarily for contributions obtained through solicitation campaigns throughout the year; that under Proclamation No. 12 of the President of the Philippines dated May 14, 1986, PNRC is authorized to hold a nationwide membership and annual fund campaign; and that the "Dual-duel" it is sponsoring on October 11, 1989 at the Araneta Coliseum is one of such fund raising events. In reply, please be informed that pursuant to Section 4, par. b of P.D. No. 1264, the Philippine National Red Cross shall cdtech a. . . . b. Be exempt from payment of all duties, taxes, fees, and other charges of all kinds on all importations and purchases for its exclusive use, on donations for its disaster relief work and other Red Cross services, and in its benefits and fund raising drives all profits and fund raising drives all provisions of law to the contrary notwithstanding. Accordingly, the proceeds to be derived by the PNRC from the aforesaid boxing promotion as part of its annual fund raising campaign are not subject to income and amusement taxes. However, money prizes exceeding P3,000.00 to be derived by the Filipino participant in said boxing promotion shall be subject to a final tax of 20% pursuant to Section 21(c)(1) of the Tax Code, as amended, while money prizes amounting to P3,000.00 or less shall be subject to the graduated income tax rate under Section 21(a) of the same Code. On the other hand, the money prizes of the foreigner-participant, if any, in the boxing match shall be subject to a tax of 30% based on the total amount thereof pursuant to Section 22(b) of the Tax Code. As the promoter, the PNRC shall withhold the aforesaid 20% and 30% final tax before paying the money prizes to the persons entitled thereto pursuant to Sections 21(c)(1) and 22(b) in relation to Sections 50(a) and 52 of the Tax Code, as amended by Executive Order No. 37. It is understood, however, that this ruling will be revoked if upon investigation, the facts subsequently gathered by this Office are materially different from the facts on which this ruling was based. cdt Very truly yours, (SGD.) JOSE U. ONG Commissioner