BIR Ruling No. 437-15

December 23, 2015 BIR RULING NO. 437-15 Section 101 (A) (2) & 101 (B) (1) of the Tax Code of 1997, as amended; BIR Ruling No. 048-2010 National Disaster Risk Reduction and Management Council NDRRMC, Camp General Emilio Aguinaldo Quezon City Attention: Usec. Alexander P. Pama Executive Director Gentlemen : This refers to your letter dated February 16, 2015 requesting information on the tax treatment of donations by local and foreign donors in relation to the Memorandum of Agreement and Deed of Donation dated May 16, 2014 executed by and between the Office of the Civil Defense-National Disaster Risk Reduction and Management Council (OCD-NDRRMC) and SMS Global Technologies, Inc. (SMSGT). Pursuant to the Memorandum of Agreement and Deed of Donation notarized on May 16, 2014, SMSGT shall donate to OCD-NDRRMC the Intelligent Operations Center (IOC) Package consisting of the following: 1. A three (3) storey IOC Central Office, including communications, electronics and information systems (CEIS) facility that will be situated near OCD Building, that would house the office and communication-electronics information systems and equipment. The IOC will provide technical capability by linking the seventeen (17) Office of the Civil Defense Regional Centers. 2. OCD Regional IOCs with communications equipment and systems necessary to connect the seventeen (17) OCD Regional Centers to the central IOC. 3. Rapid Emergency Telecommunications Team (RETT) Communications Vehicle equipped with the latest and robust voice, data, IP, SMS and video communication devices and support system. The Agreement shall have the same effect as that of Deed of Donation for the IOC Package on condition that actual donation shall be enforced and realized only upon receipt and acceptance of said IOC Package. In reply, please be informed that Section 101 (A) (2) and 101 (B) (1) of the Tax Code of 1997, as amended, provides for the exemption from donor's tax of donations made to or for the use of the National Government or any entity created by any of its agencies which is not conducted for profit, or to any political subdivision of the said Government, to wit: "SEC. 101. Exemption of Certain Gifts . The following gifts or donations shall be exempt from the tax provided for in this Chapter: CAIHTE (A) In the Case of Gifts Made by a Resident. (1) . . . (2) Gifts made to or for the use of the National Government or any entity created by any of its agencies which is not conducted for profit, or to any political subdivision of the said Government; and xxx xxx xxx (B) In the Case of Gifts Made by a Nonresident not a Citizen of the Philippines. (1) Gifts made to or for the use of the National Government or any entity created by any of its agencies which is not conducted for profit, or to any political subdivision of the said Government. xxx xxx xxx" Accordingly, since the donation will be made to or for the use of the OCD-NDRRMC, a multi-agency government entity under the Department of National Defense which is not conducted for profit, the donation of the IOC Package by SMSGT made to or for the use of OCD-NDRRMC relative to the Memorandum of Agreement and Deed of Donation dated May 16, 2014, shall be exempt from the payment of donor's tax pursuant to Section 101 (A) (2) and 101 (B) (1) of the Tax Code of 1997, as amended. It is understood that the IOC Package shall be used solely for its intended purpose in accordance with Memorandum of Agreement and Deed of Donation dated May 16, 2014. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue