Donations to the Government are Not Deductible for Income Tax Purposes in the Case of International Carriers who are Taxed on Their Gross Philippine Billings

December 22, 1987 BIR RULING NO. 409-87 30 (h) (2) (A) 000-00 409-87 Gentlemen : This refers to your letter dated April 14, 1987 requesting a ruling as to whether the donation made by you on January 30, 1986 consisting of personal property valued at $8,000.00 in favor of the Pamantasan ng Lungsod ng Maynila may be deducted in full from your income tax liability for the year 1987. In reply, please be informed that your request is answered in the negative for lack of legal basis. Moreover, although as a rule, donations in favor of the Government of the Philippines or to any of its agencies or political subdivisions exclusively to finance, to provide for, or to be used in undertaking priority activities in education , health, youth and sports development, human settlements, science and culture, and in economic development according to a national priority plan to be determined by the NEDA are deductible in full under Section 30(h) (2)(A) of the Tax Code, as amended by Batas Pambansa Blg. 45, it is not, however, deductible for income tax purposes in the case of international carriers like you who are being taxed on their gross Philippine billings pursuant to Section 24(b)(2)(i) of the Tax Code, as amended. Under Article 8 of the Tax Treaty between the Republic of the Philippines and the Federal Republic of Germany, you are subject to income tax at the rate of 1.5% of the gross revenue derived from sources within the Philippines. Gross income taxation as a rule, does not admit of deductions except those specifically provided as deductible items thereto. Moreover, the letter of this Office dated February 11, 1987, to the said Pamantasan which is cited in your letter, cannot be applied to support your claim for deduction. It is noted that the deduction referred to therein pertain to donations made by donors which are subject to income tax based on net income. As heretofore stated, you are subject to Philippine income tax of 1.5% based on your gross income. cdta Very truly yours, (SGD.) EUFRACIO D. SANTOS Officer-in-Charge