BIR: Donations to COVID-19 response tax-deductible

MANILA, Philippines — Donations in cash and in kind in response to the COVID-19 pandemic are exempt from donor’s tax and can be deducted from the taxable gross income of companies and individuals.

This is according to Revenue Regulations No. 9-2020, published on Wednesday and signed by Finance Secretary Carlos Dominguez III and Internal Revenue Commissioner Caesar Dulay, which listed the tax exemptions of donations given during the enhanced community quarantine imposed in Luzon and other areas until April 30.

The Bureau of Internal Revenue (BIR) said the following would be considered fully deductible against the gross income of donor corporations and individuals: cash donations; donations of critical or needed health-care equipment or supplies (as listed down in the Bayanihan Law); relief goods, including food packs (rice, canned goods and noodles, etc.) as well as water; and the use of property, whether real (buildings/lots) or personal (such as vehicles for shuttle services).

Tax exemptions

To be tax-exempt, the donations should be made to the national government and its agencies—including public hospitals—as well as “accredited nonstock, nonprofit educational and/or charitable religious, cultural or social welfare corporation, institution, foundation, nongovernmental organization, trust or philanthropic organization, and/or research institution or organization.”

Required documents

To avail of the incentive, donors need to submit a notice of donation and supporting documents, including the deed of donation for cash, goods or services given to the government, and a certificate of donation for those coursed through nongovernment entities.

Amid the national emergency due to COVID-19, the BIR said donations or gifts to “private hospitals and even nonaccredited nonstock, nonprofit institutions and organizations, as well as local private corporations, civil organizations and/or international organizations/institutions involved in COVID-19 relief activities,” are also tax-exempt, as long as donees complied with the documentary requirements.

The revenue regulation also said donated medical equipment and supplies, as well as relief goods would also be exempted from the value-added tax slapped on sales transactions.

The BIR can, however, audit and investigate the donations to verify if they indeed qualified for donor’s tax exemption and deductibility from gross income.