BIR: Donors should sign “Deed of Donation”

CEBU, Philippines - The Bureau of Internal Revenue said that the donors contributing huge amount of money to “Piso Mo, Hospital Ko” fund drive of the Cebu City government need to execute a “Deed of Donation”.

They are however exempted from paying the donors’ tax as provided for under the Revenue Code of 1997.

“The donors should execute DOD kadtong dagko nga amount not necessarily kadtong sa treasurer’s office nga receipt,” BIR regional legal chief Neri Yu told The Freeman.

But city treasurer Diwa Cuevas said the donors need not execute the “deed of donation”.

“Mo execute sila for income tax purposes only. We (City Treasure’s Office) issued an Official receipts to the donors,” Cuevas said adding that CTO will audit the amount after it will be disbursed.

OIC regional director Hermeno Palamine on the other hand said that the donors are not required to pay taxes for the donation made.

He cited Sec. 101 (A-3) of National Internal Revenue Code of 1997 which provides exemption to “gifts in favor of an educational and/or charitable, religious, cultural or social welfare corporation, institution, accredited nongovernment organization, trust or philanthropic organization or research institution or organization”.

The provision further states that “gifts made to or 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,” are tax exempt.

According to Yu, donations to the government or government instrumentalities are exempted from donors’ tax regardless of the amount.

The proceeds of the campaign will be used to rebuild the Cebu City Medical Center (CCMC) which was declared unsafe following the October 15 earthquake. The reconstruction was estimated to cost the city P1.5 billion.  

Yu explained that there are two categories of donation such as taxable donation and exempt donation. But all of these will be monitored for purposes of determining whether it is taxable or not.

“I verify namo ang mga ni-donate whether it was claimed for tax deduction. I allow ba to namo as deduction or not but they will have to show a supporting documents,” Yu said.

The city government has so far raised over P7.8 million donations. Among the huge donors in the campaign are Chong Hua Hospital (P1 million), Senator Peter Alan Cayetano (P101,000), SM Prime Holdings Inc. (P5 million), and Davao City Mayor Rodrigo Duterte (P500,000).

Yu said that these donations should be “audited by an accounting firm para makarecord ang city hall sa mga benefactors”.

“Naay transaction document or supporting document para inig issue sa receipt, always they can explain nga this is a donation by a donor through a deed of donation,” Yu explained. (FREEMAN)