RR No. 10-2003: Implements the tax incentives provisions of Republic Act No. 8525, otherwise known as the “Adopt-a-School Act of 1998”

Key points

1. Incentives for adopting entities. A pre-qualified private entity that signs an Agreement with a public school may deduct from gross income the contributions actually, directly and exclusively incurred for the Program, plus an additional amount equal to 50% of them, subject to the Regulations. The donor’s assistance is also exempt from Donor’s Tax.
2. Foreign donations. The VAT and Excise Tax, if any, on imported goods are assumed by DepEd, CHED or TESDA, as the case may be, except where the importation is exempt from VAT. That VAT is deemed automatically appropriated and treated as government expenditure.
3. Local donation as transaction deemed sale. Transfer of goods or properties originally intended for sale is subject to VAT. The donor may claim available input tax under the rules on allocation among taxable, zero-rated and exempt sales, while the public school is the final consumer and gets no input VAT.
4. Other local donations. If the local donation is not a transaction deemed sale, the transfer to the public school is exempt from VAT.

Who is affected

• Pre-qualified private entities adopting a public school
• Public schools receiving donations
• DepEd, CHED and TESDA