Tax Imposed on the Importation of Shooting Equipment

December 15, 1989 BIR RULING NO. 262-89 94 (a) (3); 101 (a); 147 (b) 000-00 262-89 Gentlemen : This refers to your letter dated June 16, 1989 which was referred to this Office by the Secretary of Local Government relative to your request for exemption from payment of the following taxes: (i) specific tax on documentary films; (ii) amusement tax on sponsored movies and other show benefits; (iii) value-added tax on importation of shooting equipment, raw materials such as color film negatives, color films positives, magnetic tapes, sound negatives and high contrast for purposes of shooting documentary films throughout the country and other related materials. You also request that all donations to that foundation be exempt from payment of the donor's tax and that the same be deductible from the income tax of the donor. It is represented that the Anti-Drug Addiction Foundation of the Philippines, Inc. is a non-stock, non-profit, non-partisan and non-sectarian organization duly organized and existing under the laws of the Philippines purposely to help and fight drug addiction throughout the country and to stop illegal fishing. As a charitable institution, the foundation practically subsists on donations from concerned citizens, firms or corporations sponsorship of movie premiere showings and benefit shows and that no part of the funds of the foundation shall inure to the benefit of any individual member. In reply, please be informed as follows: (1) It appears that one of your objectives is to conduct an intensive and extensive educational campaign by acquainting the people as to the definition, sources and harmful effects of prohibited drugs and their derivatives upon the drug victims mostly children and teenagers, also adults and old age people; and that the 10 minute MM MOVIE PRESENTATION which you will co-launch and co-produce with the city and provincial governments and which will be shown in all theatres nationwide as an intermission is only for the purpose of disseminating information nationwide on the evil effects of drug addiction and illegal fishing, depicting the root causes and remedial measures the government and the private sector will undertake to stop the rising problem. Such being the case, this Office believes that such documentary film may be considered as educational film, hence, exempt from the specific tax pursuant to Section 147(b) of the Tax Code, as amended by Executive Order No. 273. (2) The collection of the amusement tax on admission to theatres and other exhibition places has been transferred to the local governments by virtue of Presidential Decree No. 231, as amended. Accordingly, your request for exemption from the amusement tax of your sponsored movies and other show benefits should be filed with the city and provincial governments concerned. (3) Importations of articles consigned to educational and/or charitable religious cultural or social welfare corporation or institution are not exempt from the value-added tax under any of the VAT provisions of the Tax Code. Accordingly, your request for exemption from the value-added tax of your importation of shooting equipment, raw materials such as color film negatives, color film positives, magnetic tapes, sound negatives and high contrast cannot be granted for lack of legal basis. However, your importation of educational film is exempt from VAT by virtue of the UNESCO Florence Agreement. (BIR Ruling No. 41-88, 64-88, 211-89). (4) Pursuant to Section 94(a)(3) of the Tax Code, as amended, gifts in favor of that Foundation being a charitable and social welfare corporation or institution are exempt from the donor's tax, provided that not more than 30% of said donation shall be used by the donee for administration purposes. Moreover, under Section 29(h)(1) of same Code, said gifts are deductible for income tax purposes in 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 income derived from business as computed without the benefit of said deduction. However, said donations or contributions can be deductible in full provided that conditions are complied with as prescribed by Section 29(h)(2)(c) of the Tax Code, as amended by Batas Pambansa Blg. 45, and as implemented by BIR-NEDA Regulations No. 1-81. (BIR Ruling No. 154-89). cdtech Very truly yours, (SGD.) JOSE U. ONG Commissioner