BIR Ruling No. 670-2017

REPUBLIC CIF THE PHILIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE

R.A. No. 8525 Scction 34(H)(2),T`ax Code of l997 BIR Ruling No. 292-2016

r670-2017 12-20-2017

329 Bonifacio St., Davao City ALSONS DEVELOPMENT & INVESTMENT CORPORATION

Attention: AGM-Management Services Group AMADO C. BERNARDINO

Gentlemen:

Republic Act (R.A.) No. 8525, otherwise known as the "*Adopt-A-School Act of 1998." Development and Investment Corporation ("Alsons") for the availment of the cxemption from donor's tax and deductibility of its donation made in accordance with This refers to your letter dated April 8, 2016, requesting on behalf of Alsons

wages of six (6) of its non-DepEd teaching plantilla for the school years 2013-2014. Alsons proposed to provide materials for the repair of flooring and walls of the school's second floor classrooms; and that a Deed of Donation dated August 11, 2015 was to the latter the amount of School (the "school"), whereby Alsons has proposed to the school to subsidize the 2014-2015 and 2015-2016: that Alsons executed a Deed of Donation dated April 1 2015 in favor of Cabantian National High School whereby the former donated to the latter the total amount of P30.000.00 for the wages of the school's non-DepEd teaching plantilla for the period covering January to March 31, 2015; that on June 3, 2015. a MOA was likewise executed between Alsons and MAA National High School whereby executed between AIsons and MAA Na:ional High School in which the former donated Commission (SEC) under SEC Registration No. : entered into a Memorandum of Agreement (MOA) with Cabantian National High s a domestic corporation duly rcgistered with the Securities and Exchange Based on the documents submitted, it is shown that Alsons (TIN: for the aforesaid repair. that on May 10, 2013, Alsons

and 5% in the case of a corporation of the taxpayer's taxable net income as computed of 1997. as amended, donations to the Government. its agencies or politica? donations not in accordance with the National Priority Plan are subject to limited deductibility or deductions to an amount not exceeding 10% in the case of an individual without the benefit of this deduction. subdivisions are deductible in full from the gross income of the donor. However. In reply, please be informed that under Section 34 (H) (2) (a) of the Tax Code

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Moreover, Section 5 of RA No. 8525 provides for an additional deduction from

the gross income of the adopting entity equivalent to fifty percent (50%) of the expenses

incurred for the project, to wit:

Adoption. --- Provisions of existing laws to the contrary notwithstanding. "SEC. 5. Additional Deduction for Expenses Incurred for the

expenses incurred by the adopting entity for the 'Adopt-a-School Program

shall be allowed an additional deduction from the gross income equivalent

to fifty percent (50%) of such expenses.

Valuation of assistance other than money shall be based on the

acquisition cost of the property. .

The above provision is implemented by Revenue Regulations (RR) No. 10-2003

which provides for the guidelines in the availment of the additional deduction for the

expenses incurred by the adopting entity:

"SECTION 3. Tax Incentives Accruing to the Adopting Private Entity. -- A pre-qualified adopting private entity. which enters into an Agreement with a' public school. shall be entitled to the following tax incentives:

contribution/donation that were actually, directly and exclusively incurred (a) Deduction from the gross income of the amount of

for the Program, subject to limitations. conditions and rules set forth in

percent (50%) of such contribution/donation subject to the following Section 34(H) of the Tax Codc, plus an additional amount equivalent to fifty conditions:

(1) That the deduction shall be availed of in the taxable year in which the expenses have been paid or incurred:

(2) That the taxpayer car: substantiate the deduction with sufficient evidence. such as official receipts or delivery receipt and other adequate records -

(2. 1) The amount of expenses being claimed as deduction:

provide a list of projects and/or activities undertaken and thc Agreement: and (2.2) The direct connection or relation of the expenses to School Program. The adopting private entity shall also the cost of each undertaking, indicating in particular where and how the assistance has been utilized as supported by the adopting private entity's participation in the Adopt-a-

contributed/donated" property by the recipient public school. (2.3) Proof 1 acknowledgmentofreceiptofthe

(3) That the application. together with the approved Agreement of business of the donor/adopting private entity, copy furnished Revenue District Office (RDO) having jurisdiction over thc placc endorsed by the National Secretariat. shall' be filed with the

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the RDO having .urisdiction over the property, if the contribution/donation is in the form of real property.

tax pursuant to Sections 101 (A)(2) and (B)(1) of the Tax Code of 1997. (b) Exenption of the Assistance made by the donor from payment of donor's

it actually, directly and exclusively incurred in the wage subsidy and repair of the percent (50%) thereof in the amount of school's flooring and walls amounting to deductible from its gross income. plus an additional deduction equivalent to fifiy compliant with the requirements set forth under Section 3 of RR 10-2003, the amount Accordingly. since Alsons Development and Investment Corporation is (BIR Ruling No. 292-2016 dated June 27,2016) t, or a total deductible amount of is fully

pursuant to R.A. No. 8525. as implemented by RR No. 10-2003, and Section 101 (A) (2) of thc Tax Code of 1997, as amended. (BIR Ruling No. 292-2016 dated June 27. 2016) Lastiy, the above donation is likewise exempt from the payment of donor's tax

However, if upon investigation. it will be disclosed that the facts are different, then this ruling shall be considered null and void. This ruling is being issued on the basis of the foregoing facts as represented.

Very truly yours. aM

Commissioner of Internal Revenuc CAESAR R. DULAY 11953 K-

donation amounts to 1 While the Indorsement from Br. Armin A. Luistro, Secretary of DepEd, states that 100% of the amount of 3, the Deed of Donation dated August 11, 2015, covers only the