BIR RULINGS
- Donations made for the use of the National Government or any entity created by any of its agencies which is not conducted for profit or to any political subdivision of the said Government shall be exempt from the donor’s tax.
- Furthermore, the Deed of Donation is not subject to documentary stamp tax, but only to the documentary stamp tax on the certification. (BIR Ruling No. DT-212-21, June 16, 2021).
- Donations to the Government, its agencies or political subdivisions are deductible in full from the cross 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.
- Expenses incurred by the adopting entity for the “Adopting-a-School Program” shall be allowed an additional deduction from the gross income equivalent to fifty percent (50%) of such expenses.
- Furthermore, donations made for the use of the National Government or any entity created by any of its agencies which is not conducted for profit or to any political subdivision of the said Government shall be exempt from the donor’s tax.
- Thus, the amount incurred by the donor corporation for the proposed provision of educational supplies and educational incentives and the implementation of feeding programs in several schools of the Department of Education is fully deductible from gross income plus additional deduction equivalent to 50% thereof and is exempt from donor’s tax.(BIR Ruling No. DT-213-21, June 16, 2021).
- Retirement benefits received under the Labor Code shall not be included in the gross income and therefore not forming part of the taxable income.
- Under the Labor Code, in absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of 60 years or more, but not more than 65 years which is declared the compulsory retirement age, who has served at least 5 years in the service of the same employer may retire and shall be entitled to retirement pay equivalent to at least ½ month salary for every year of service, a fraction of at least 6 months, being considered as one whole year.
- Furthermore, the terminal pays not exceeding ten (10) days during the year are not subject to income tax and to the withholding tax. However, it is not applicable to sick leave credits since and employee must actually go on sick leave to be avail of said leave credits
- Exemption does not include the payment of the separated employees’ salaries and the payment of the 13thmonth pay and other benefits in excess of the Php90,000.00. (BIR Ruling No. OT-214-21, June 21, 2021).
- A non-stock, non-profit corporation or association organized and operated exclusively for educational purposes shall be exempt from taxes and duties, if its revenues are actually, directly and exclusively used for educational purposes.
- Non-stock means no part of its income is distributable as dividends to its members, trustees or officers and that nay profit obtained as an incident to its operation shall, whenever necessary or proper, may be used for the furtherance of the purpose or purposes for which the corporation was organized.
- Non-profit means that no income or asset accrues to or benefits any member or specific person, with all the net income or asset devoted to the institutions’ purposes and all its activities conducted not for profit.
- The giving of salaries or allowances to the members of the board of trustees is considered as distribution of equity (including the net income). This is a form of private inurement which the law prohibits in the organization and operation of a non-stock, non-profit corporation. This violates the requirement that no part of the net income or assets of the corporation shall inure to the benefit of any individual or specific persons. (BIR Ruling No. SH30-215-21, June 21, 2021).
- The Commission on Elections (COMELEC) is exempt from 12% VAT on its local purchases of goods and services as well as VAT on importation of goods that will be used in automated national and local elections. Thus, suppliers/sellers of goods and services to COMELEC cannot shift or pass on any VAT to COMELEC on the latter’s purchases of goods and services that were actually used for automated national and local elections until the completion of the post-election activities.
- Furthermore, COMELEC shall no longer withhold and remit to BIR the five percent (5%) final withholding VAT. (BIR Ruling No. VAT-216-21, June 23, 2021).
