Tax perks await donors of gadgets, computers to public schools for new normal in learning

MANILA, Philippines—With blended learning and online classes in full swing, donors of computers and other gadgets to public schools will be rewarded with tax deductions under the Bayanihan to Recover as One Act, the Bureau of Internal Revenue (BIR) said on Thursday (Oct. 8).

Revenue Regulations (RR) No. 26-2020, signed by Finance Secretary Carlos G. Dominguez III and Internal Revenue Commissioner Caesar R. Dulay, said the tax perk under Bayanihan 2 applied to donations of personal computers, laptops, tablets, mobile phones, printers and other similar equipment to be used by teachers and students in government-run schools, including state universities and colleges (SUC) and vocational institutions under the Technical Education and Skills Development Authority (Tesda).

The tax incentive will apply to donations made during the implementation of the Bayanihan 2 Law from Sept. 15 until Dec. 19.

The BIR said donors will enjoy tax deduction from their gross income equivalent to the amount of donation.

Donors must indicate in their deeds of donation the types and quantities of donated items and their total value (the actual acquisition cost of new ones or their depreciated value for used items) by submitting sales invoices and delivery receipts on top of proof or acknowledgement of receipt by the beneficiary-schools.

“The deduction shall be availed in the taxable year in which the expenses have been paid or incurred,” the BIR added.

The BIR said foreign donations will be exempt not only from value-added tax (VAT) but also the requirement for authority to release imported goods (ATRIG) to speed up release of the donated goods by the Bureau of Customs (BOC).

“The BIR may, however, conduct post-investigation audit on the importations released by the BOC without ATRIG pursuant to this regulation,” it said.

The BIR said local donations of items, which were originally for sale or business use by the donor before they were donated, “shall not be treated as transaction deemed sale subject to VAT” under the Tax Code.

“Furthermore, any input tax VAT attributable to the purchase of donated personal computers, laptops, tablets, or similar equipment not previously claimed as input tax shall be creditable against any output tax,” the BIR added.

During the implementation of the earlier Bayanihan to Heal as One Act at the height of the COVID-19 lockdown from March to June, cash and goods donations in response to the pandemic were not only to be exempted from donor’s tax but will also be deducted from companies and individuals’ gross income subjected to tax.

When asked last September, Deputy Revenue Commissioner Arnel S.D. Guballa told the Inquirer that the BIR has yet to determine how much in tax exemptions would be allowed donor-taxpayers.

Another regulation, RR 27-2020, also issued by Dominguez and Dulay, suspended the mandatory filing and 90-day processing period for VAT refund claims during implementation of Bayanihan 2.

RR 27-2020 listed down extended deadlines to file VAT refunds for calendar and fiscal quarters ending in September, October, November and December 2018 to give taxpayers more time to prepare and comply amid a prolonged COVID-19 community quarantine.

Also, RR 27-2020 laid down the schedule for filing of VAT refund claims in areas which would remain on quarantine by the time that Bayanihan 2 expires.

Edited by TSB