[There are a number of ways the government can release financial assistance or social amelioration programs during the Enhanced Community Quarantine (ECQ) brought about by the Coronavirus Disease 2019 (COVID-19). The government may directly release cash to recipients. The government can also encourage the private sector to donate, and consider the donation as deductions for purposes of computing the taxes payable by the donor. For this purpose, the Bureau of Internal Revenue (BIR) issued Revenue Regulations No. 9-2020 dated 6 April 2020. Text reproduced below.]
REVENUE REGULATIONS NO. 9-2020
April 6, 2020
SUBJECT : IMPLEMENTING SECTION 4(Z) AND SECTION 4(EE) OF REPUBLIC ACT NO. 11469, OTHERWISE KNOWN AS THE “BAYANIHAN TO HEAL AS ONE ACT“, BY GRANTING FURTHER BENEFITS ON DONATIONS DURING THE PERIOD OF THE ENHANCED COMMUNITY QUARANTINE (ECQ) IN RELATION TO THE NATIONAL INTERNAL REVENUE CODE (NIRC) OF 1997, AS AMENDED
TO : ALL INTERNAL REVENUE OFFICERS AND OTHERS CONCERNED
Section 3. FULL DEDUCTIBILITY OF SPECIFIC DONATIONS/GIFTS ALREADY EXEMPT FROM DONOR’S TAX UNDER THE LAW. – Based on the law, it is hereby declared that the following specific donations/gifts made in accordance with Section 101, as implemented by Revenue Regulation No. 12-2018, and Section 34 (H), both of the NIRC or 1997, as amended, when given for the sole and exclusive purpose of combatting COVID 19 during the period of the state of national emergency under R.A. No. 11469, shall be considered fully deductible against the gross income fo the donor-Corporation/donor-individual:
(a) Cash donations;
(b) Donations of all critical or needed healthcare equipment or supplies as enumerated above;
(c) Relief goods such as, but not limited to, food packs (rice, canned goods, noodles, etc.) and water; and
(d) Use of property, whether real or personal (shuttle service, use of lots/buildings);
To be entitled to full deductibility, said donations shall be made to any of the following donees as enumerated under Sections 34 (H), in relation to Section 101 of the NIRC of 1997, as amended, and as implemented by Section 17 of Revenue Regulation No. 12-2018, namely:
- 1. National Government or any entity created by any of its agencies (including public hospitals) which is not conducted for profit, or to any political subdivision of the said Government, including fully-owned government corporations; and
- 2. Accredited non-stock, non-profit educational and/or charitable, religious, cultural or social welfare corporation, institution, foundation, non-government, trust or philanthropic organization and/or research institution or organization.
Moreover, donations of any of the above items to the National Government or to any of its agencies or political subdivisions, including fully-owned government corporations, for the sole and exclusive purpose of combatting the COVID-19, shall be allowed full deductibility, regardless if covered by the National Economic and Development Authority (NEDA)’s annual priority plan, considering that such donations are made during State of Public Emergency and State of Calamity as declared by no less than the President per Presidential Proclamation Nos. 922 and 929, series of 2020.
The requirement of submission of a Notice of Donation shall be dispensed with for this purpose.
Supporting Documents. – In order to be fully deductible and allowable as an expense against the gross income of the donor-Corporation and/or donor-individual, said exempt donation/gifts shall be supported by the following documents:
Donee-Recipient : National government or any entity created by any of its agencies which is not conducted for profit (including public hospitals), or to any political subdivision of the said Government, including fully-owned government corporations
- Supporting Document: Deed of Donation
Donee Recipient : Accredited non-stock, non-profit educational and/or charitable, religious, cultural or social welfare corporation, institution, foundation, non-government organization, trust or philanthropic organization and/or research institution or organization.
- Supporting Document: Certificate of Donation (BIR Form 2322)
Section 4. OTHER DONATIONS/GIFTS EXEMPTED DURING THE PERIOD OF THE STATE OF NATIONAL EMERGENCY. – Furthermore, donations of (a), (b), (c) and/or (d) under the immediately preceding section, when made during the period of the state of national emergency, for the sole and exclusive purpose of combatting to the following donees:
Section 5. DEDUCTIBILITY OF OTHER DONATIONS/GIFTS MADE DURING THE PERIOD OF THE STATE OF NATIONAL EMERGENCY FOR THE SOLE AND EXCLUSIVE PURPOSE OF FIGHTING COVID-19. – All donations/gifts under Section 4 hereof when made during the period of the state of national emergency, for the sole and exclusive purpose of fighting COVID 19 shall also be deductible in full against the gross income of the donor-Corporation and/or donor-individual and subject to the timely submission of documentary requirements as enumerated in Section 6 hereof.
Section 6. DOCUMENTARY REQUIREMENTS. – Donations made under Section 4 hereof, shall only be considered exempt from donor’s tax and fully deductible when the requirements for documentation below are complied with:
Donee-Recipient : Accredited non-stock, non-profit educational and/or charitable, religious, cultural or social welfare corporation, institution, foundation, non-government organization, trust or philanthropic organization and/or research institution or organization
Non-stock non-profit educational and/or charitable, religious, cultural or social welfare corporation, institution, foundation, non-government organization (even if non-accredited), to include those organized and operated exclusively for health purposes such as private hospitals, trust or philanthropic organization and/or research institution or organization
- Documentary Requirements for Donee-Recipient : 1) Liquidation report (Annex A)
- Documentary Requirements for Donor : 1) Sworn Certification (Annex B) executed by the President of the donor-Corporation or any of its authorized officers or by the donor-individual himself, stating the name of the donee, the date of the donation, the value of the donation and stating that the donation was made solely for the purpose of supporting efforts to fight COVID 19 during the period of the state of national emergency together with proof of purchase (if donation is in kind); 2) BIR-registered Acknowledgement Receipt or the template for an acknowledgement receipt under Annex C hereof
Donee-Recipient : Local private corporations or international organizations / institutions who partner to serve as conduit with accredited NGOs and/or 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
- Documentary Requirements for Donee-Recipient : 1) Liquidation report (Annex A); 2) Certificate of Donation (BIR Form 2322) or Deed of Donation.
- Documentary Requirements for Donor : 1) Certificate of Donation (BIR Form 2322) or Deed of Donation duly issued by the accredited NGO or government institution, respectively in the name of the donor-corporation/individual; 2) Proof of purchase (if donation is in kind; 3) BIR-registered Acknowledgement Receipt or the template for an acknowledgement receipt under Annex C hereof to be issued by the ultimate beneficiary
These documentary requirements shall be submitted to the respective Revenue District Office (RDO) where the donor and the donee-recipient are registered in accordance with the form attached within sixty (60) days from the lifting of the Enhanced Community Quarantine (ECQ).
Section 7. VALUE ADDED TAX (VAT) TREATMENT OF DONATIONS IN KIND. – Donations of (b) and (c) under Section 3 hereof shall not be treated as a transaction deemed sale subject to VAT under Section 106 (B) of the NIRC, as amended. Furthermore, any input VAT attributable to such purchase of goods shall be creditable against any other output tax.
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