RR No. 26-2020: Implements Section 4 (zzz) of RA No. 11494 (Bayanihan to Recover as One Act) relative to donations of identified equipment for use in public schools

Key points

1. Covered donations and period. Personal computers, laptops, tablets or similar equipment (such as a mobile phone or printer) used for teaching and learning in public schools. Coverage runs from September 15, 2020 to December 19, 2020.
2. Income tax deduction. The donation is deductible from gross income, subject to Section 34 (H) of the Tax Code. The Deed of Donation must detail the items, quantity and value, the deduction is claimed in the year the expense is paid or incurred, and it must be backed by documents such as sales invoices, delivery receipts and proof of receipt by the school.
3. Donor’s Tax exemption. Donors are exempt from Donor’s Tax under Sections 101 (A) (2) and (B) (2) of the Tax Code.
4. Foreign donations. Importation by DEPED, CHED or TESDA is exempt from VAT. If the importer is another party, a Deed of Donation accepted by those agencies is required. No ATRIG is needed, though the BIR may conduct a post investigation audit.
5. Local donations and VAT. Equipment originally meant for sale or business use is not a transaction deemed sale subject to VAT under Section 106 (B) (l). Unclaimed input tax on the donated items is creditable against output tax.
6. Valuation and rulings. The donation is valued at actual acquisition cost, or depreciated value if used. No prior BIR ruling is required, and the rules also apply to donations by ECOZONE locators.

Who is affected

• Donors of equipment to public schools
• ECOZONE locators
• DEPED, CHED and TESDA

Deadlines and effectivity

• Donations from September 15, 2020 up to December 19, 2020