BIR Ruling No. 251-11

July 26, 2011 BIR RULING NO. 251-11 Sections 5 (c) and 6 of Republic Act No. 10072 (Philippine Red Cross Act of 2009); Revenue Memorandum Circular No. 59-2010 Philippine National Red Cross Baguio City Chapter 39 Harrison Road Baguio City Attention: Anastacia B. Tamayo Chapter Administrator Gentlemen : This refers to your letter dated 19 January 2011 requesting for a ruling that the winner of any raffle draw to be conducted by the Philippine Red Cross (PRC) be exempted from paying any taxes pursuant to Revenue Memorandum Circular No. 59-2010 which circularized Sections 5 (c) and 6 of Republic Act (R.A.) No. 10072 "The Philippine Red Cross Act of 2009". caIETS In reply, please be informed that certain tax privileges were granted to Philippine National Red Cross under Republic Act No. 10072 (Philippine Red Cross Act of 2009) as follows: "Sec. 5. Privileges. To allow it to fully realize its mandate under the Geneva Convention, the Statutes of the International Red Cross and Red Crescent Movement and this Act, the Philippine Red Cross shall: (a) . . . (b) . . . (c) Be exempt from payment of all direct and indirect taxes, all provisions of law to the contrary notwithstanding, including value-added tax (VAT), fees and other charges of all kinds on all income from its operations, including the use, lease or sale of its real property, and provision of services. The Philippine Red Cross shall also be exempt from direct and indirect taxes, including VAT, duties, fees and other charges on importations and purchases for its exclusive use. (d) . . . Sec. 6. Membership. Membership in the Philippine Red Cross shall be open to the entire population in the Philippines regardless of citizenship. Any contribution to the Philippine Red Cross Annual Fund Campaign shall entitle the contributor to membership for one (1) year and the said contribution shall be deductible in full for taxation purposes." On 1 July 2010, the Bureau of Internal Revenue issued Revenue Memorandum Circular No. 59-2010 which circularized the above cited provisions of Republic Act No. 10072. Although R.A. No. 10072 exempts PRC from direct and indirect taxes, the said law cannot be used as legal basis to exempt winners of raffle draws conducted by PRC from paying the applicable taxes. It should be noted that taxes imposed on prizes are a form of income tax on the winner. Thus the tax exempt status of the entity which conducted the raffle will not affect the taxability of the transaction. Your request that the winner of any raffle draw to be conducted by the PRC be exempted from paying any taxes is hereby denied for lack of legal basis. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue