BIR Ruling No. 350-2017

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE Quezon City

R.A. No. 8525: Section 34 (H) (2) of the Tax Code of 1997, as amended: RR 10- 2003 BIR Ruling No. 292-16

001

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

Attention:AMADO C. BERNARDINO

Asst. General Manager-Management Services

Gentlemen:

This refers to your letter dated March 6, 2013, requesting for a ruling on the additional fifty percent (50%) special deduction to be deducted from the donor's gross income under Republic Act (R.A.) No. 8525 (Repair and Repainting of Technology and Livelihood Bldg. of Cabantian National High School in Cabantian. Davao City for the Year2012.

Documents submitted disclosed that Alsons Development and Investment Corporation (TIN: ) is a domestic corporation duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. that Alsons Development and Investment Corporation entered into Memorandum of Agreement (MOA) with the Department of Education (DepEd). whereby the former continues to support the latter's "Adopt-A -School Program" by providing materials necessary for the repair and repainting works of the Technology and Livelihood Bidg. of Cabantian National High School Cabantian. Davao City: that Alsons Development and Investment Corporation executed a Deed of Donation in favor of Cabantian National High School, materials necessary for the repair and repainting works of the Technology and Livelihood Bldg. amounting to t and pesos (P : and that Br. Armin A. Luistro FSC. Secretary of the Deped indorsed the application for tax incentive of Alsons Development and Investment Corporation relative to its donation, 100% of which amounts to plus an additional 50% which is equivalent to for a total amount of

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In reply, please be informed that under Section 34 (H) (2) (a) of the Tax Code of 1997. as amended, donations to the Government, its agencies or political subdivisions are deductible in full from the gross income of the donor. However. 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 and 5% in the case of a corporation of the taxpayer's taxable net income as computed without the benefit of this deduction, viz.:

"(a) Donations to the Government. Donations to the Government of the Philippines or to any of its agencies or political subdivisions, including fully-owned government corporations. 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 determined by the National Economic and Development Authority (NEDA). in consultation withappropriate government agencies, including its regional development councils and private philanthropic persons and instilutions: Provided. That amy donation which is made to the Government or to any of its agencies or political subdivisions not in accordance with the said annual priority plan shall be subject to the limitations prescribed in paragraph (l) of this Subsection. "

Moreover, National Economic Development Plan (NEDA) Circular No. 01- 2009 provides the guideline for the issuance of certification of programs, projects and activities in the National Priority Plan (NPP), to wit:

"D. Procedure of the Issuance of the Certification of Inclusion in the NPP

1. Certification on inclusion in the NPP may be issued for:

a. PPA that is included in the NPPP but has not yet received any donation; and b. PPA that is included in the NPP and to which donation has been made prior to inclusion; provided that the immediately following item no. 2 has been complied with.

2. Request for certification shall be submitted to NEDA Central Office for evaluation not later than 31 December of the taxable year when donations were made so that approved tax deductions could be claimed during the succeeding year at the time of filing of income tax returns.

Attached to the records is a certification from NEDA certifying that the Adopt-A-School Program is considered a Priority Project in the National Priority Plan of the Government for the year 2012.

Moreso, Section 5 of Republic Act (R.A.) No. 8525, otherwise known as "An Act Establishing an 'Adopt-a-School Program' Providing Incentives Therefor, and for Other Purposes" provides --

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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. . .

Furthermore, Section 3 of Revenue Regulations (RR) No. 10-2003 provides that:

"SECTION 3. Tax Incentives Accruing To The Adopting Private Entity. -- A pre-qualified adopling 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 Section 34(H) of the Tax Code, plus an additional amount equivalent to fifty percent (50%) of such contribution/donation subject to the following condilions:

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

sufficient evidence, such as official receipts or delivery receipt and other (2 That the taxpayer can substantiate the deduction with

adequate records

(2.1) The amount of expenses being claimed a deduction;

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

(2.3) Proof or acknowledgment of receipt of the contributed/donated property by the recipient public school.

endorsed by the National Secretariat. shall be filed wiih the Revenue 3 That the application, together with the approved Agreement

District Office (RDO) having jurisdiction over the place of business of the donor/adopting private entity, copy furnished the RDO having jurisdiction

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over the property, if the contribution/donation is in the form of real

property.

In view of the foregoing, with the issuance of the certification from the NEDA that the "Adopt-A-School Program" of the Department of the Education is considered as a Priority Project included in the National Priority Plan of the Government, thus the amount actually, directly and exclusively incurred by Alsons Development and Investment Corporation under the Adopt-A-School Program amounting to is deductible in full from your gross income plus an amount equivalent to fifty percent (50%) of the said contribution/donation or (BIR Ruling No. 292-16 dated June 27, 2016) for a total amount of

Lastly. said amount is exempt from the payment of donor's tax pursuant to R.A. No. 8525, as implemented by RR No. 10-2003 and Section 101 (A) (2) of the Tax Code of 1997, as amended, respectively.

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

Very truly yours.

Commissioner of Internal Revenue CAESAR R. DULAY

K-1-JRC 008508