RR No. 15-2023: Implements the grant of Donor’s Tax exemption on the donation of imported capital equipment, raw materials, spare parts, or accesories directly and exclusively used by Registered Business Enterprises under Section 295 (C)(2)(e) of the National Internal Revenue Code of 1997, as amended

Key points

1. Exempt donations. Donations of items that enjoyed tax and customs duty exemption, made to TESDA, State Universities and Colleges, or DepEd and CHED-accredited schools, are exempt from Donor’s Tax.
2. Conditions. Within the first five (5) years from importation, the RBE must secure a Certificate of Approval from the concerned IPA. After five (5) years, the RBE must give the IPA prior notice. The deed of donation must detail the items, quantity or number, and amount or value for BIR post-audit.
3. Deductibility. The donated amount is deductible from the donor’s gross income, subject to limitations and rules in Section 34 (H) of the Tax Code. It is claimed in the taxable year of the donation.
4. Substantiation. The donor may support the deduction with sales invoices, the deed of donation, delivery receipts and other records showing the amount claimed and proof that TESDA, the SUC or the DepEd or CHED-accredited school received the items.
5. No deemed sale for VAT. The donation is not a transaction deemed sale subject to VAT under Section 106(B)(1). The donation amount is based on the net book value of the items.

Who is affected

• Registered Business Enterprises of existing Investment Promotion Agencies
• TESDA, SUCs, and DepEd and CHED-accredited schools as recipients

Deadlines and effectivity

• Certificate of Approval needed if donated within five (5) years from importation
• Prior notice needed if donated after five (5) years