Competence. Integrity. Commitment.

BIR RULINGS

• The corporation’s entitlement to the full deductibility of the contribution/donation from gross income of the donor requires the said corporation to present certification from the NEDA that the contributions/ donations to Schools are in accordance with priority programs, projects and activities included in the current National Priority Plan.
  • Otherwise, a donation not in accordance with the National Priority Plan is subject to limited deductibility or deduction to an amount not exceeding 10% in the case of an individual and 5% in the case of a corporation of taxpayer’s taxable net income as computed without the benefits of deduction. (BIR Ruling No: OT-348-2022)

• A non-stock and non-profit foundation is exempted from income tax and VAT only on revenues or receipts generated from donations.
• However, the corporation is liable to all other including those below:
  • Income derived from any of its properties, real or personal, or any activity conducted for profit, which income should be returned for taxation unless they are actually, directly and exclusively used for educational purposes;
  • If engaged in the sale of goods or services in the course of a business pursuit, including transactions incidental thereto, its revenues derived therefrom shall be subject to the 12% VAT, in case the gross receipts from such sales exceed Three Million Pesos (Php3,000.000.00), or the 3% percentage tax, if the gross receipts do not exceed Php3,000.000.00;
  • Acts as an employer and its employees receive compensation income subject to the withholding tax; (BIR Ruling No: Certificate of Tax Exemption No: SH30-349-2022)

• The purchases of goods/articles under the construction/development of NHA’s Socialized Housing Program is exempt from project-related income tax, creditable withholding tax and value-added tax on its income received directly in connection with the mentioned project. However, the purchases of goods/articles of the said company shall be subject to VAT, even if the said purchases are to be used for social housing projects and must issue VAT exempt official receipts on its gross receipts from the said socialized housing project. (BIR Ruling Nos: Certificate of Tax Exemption No:NSH-350-2022, NSH-351-2022)

• The Taxpayer and the Commissioner may agree on the estimated useful life and rate of depreciation of any property. The rate so agreed upon shall be binding on both the taxpayer and the BIR.
  • However, if it develops that the useful life of the property originally estimated under previous factual conditions is no longer reasonable, the law allows the taxpayer to lengthen or shorten the useful life of the property in the light of prevailing factual considerations. (BIR Ruling No: OT-353-2022)

• Notice of Tax Lien, Notice of Levy and Declaration of Forfeiture of Real Property are encumbrances in favor of the government securing the tax liability of the registered owner. However, encumbrances are effective only to cases wherein the delinquent taxpayer is the owner. If the property was sold by the owner, the subsequent tax lien or levy is no longer applicable.
  • Moreover, RMO 41-2019 provides that encumbrance is extinguished when delinquent taxpayer no longer owns the seized property prior to the lien.
  • Thus, where the property was sold to the taxpayer prior the encumbrance, the annotations are void and without legal effect. The Registry of Deeds may lift the said incumbrance to the transferee. (BIR Ruling No: OT-354-2022)