QuestionsQuestions (BIR REVENUE REGULATIONS NO. 13-98)
It is issued to implement Republic Act No. 8424, specifically Section 34(h) of the Tax Code, on the deductibility of contributions or gifts actually paid or made to accredited donee institutions.
An NGO is a non-stock, non-profit domestic corporation/organization organized and operated exclusively for specific purposes (e.g., scientific/research/educational, health, social welfare, cultural or charitable, etc.), with no part of its net income inuring to any private individual.
The NGO must utilize amounts directly for the active conduct of its purposes within the deadline (not later than the 15th day of the third month after close of the taxable year, unless extended by the Secretary of Finance upon recommendation of the Commissioner). Utilization includes payments in cash or kind, acquisition of assets used directly, properly approved set-asides for specific projects, and investments related to the NGO’s purposes, subject to conditions.
The NGO must be organized and operated exclusively for scientific, research, educational, character-building and youth and sports development, health, social welfare, cultural or charitable purposes (or a combination).
Its level of administrative expenses must not exceed 30% of the total expenses on an annual basis.
Donations actually paid or made within the taxable year to accredited NGOs are allowed full deductibility, but only if the NGO meets conditions such as timely utilization, administrative expense cap (30%), dissolution asset-distribution rule, property contribution valuation rule, and non-compensation of trustees.
Limited deductibility is capped at 10% for individual donors and 5% for corporate donors of the donor’s income derived from trade, business or profession computed without the benefit of this deduction.
Not more than 30% of donations and gifts for the taxable year may be used by the accredited NGO for administration purposes, as referenced under Section 101(A)(3) and (B)(2) of the Tax Code.
It is a non-stock, non-profit organization composed of NGO networks, designated by the Secretary of Finance to establish and operationalize accreditation to determine qualification of NGOs as qualified-donee institutions; it examines, evaluates, accredits, issues certificates, and helps ensure compliance under oversight of the Secretary of Finance and the BIR.
The Philippine Council for NGO Certification, Inc. (PCNC). It was duly designated by the Secretary of Finance pursuant to a Memorandum of Agreement dated January 29, 1998 executed between the Secretary of Finance and PCNC’s Interim Chairman.
It must submit Articles of Incorporation and By-laws; SEC Certificate of Registration; an Affidavit of Modus Operandi (character, purpose, projects for past/proposed two years, sources of income and utilization/targets, and relevant operational facts); and duly audited financial statements for past two years (or projections for newly organized within the first two years).
The criteria include: (i) Mission and Goals; (ii) Resources (including organization structure, people, systems, sources of funds, distribution of resources, and relevant exhibits like minutes, budget, audited financials); (iii) Program Implementation and Evaluation; and (iv) Planning for the Future (mechanisms to plan/implement/monitor and ensure continuity even if external funding ceases).
Claims for deductibility by donors are filed when filing their income tax returns. The accredited NGO must file its annual information return not later than the 15th day of the fourth month after close of its taxable year to maintain its status; both donor and donee returns are filed in the Revenue District Office where the place of business is located.
Accredited NGOs must issue a BIR-prescribed certificate of donation in triplicate within 30 days from receipt (original to donor, duplicate to BIR, triplicate to donee). Donors must provide a notice to the Revenue District Officer within 30 days after receiving/using the certificate, for donations worth over P1,000,000, attaching the NGO’s certificate.
For deductions: they must submit the certificate of donation showing actual receipt and date and the amount (cash) or acquisition cost (property). For donor’s tax exemption: they must submit the amount (cash), zonal value at time of donation (real property), or acquisition cost/depreciated/book value if personal property was already used.
They are prohibited from (among others): lending income/property without adequate security or reasonable interest unless part of an approved micro-credit/micro-finance program; purchasing/selling property or securities for more/less than adequate consideration; diverting income/property to board members, founders, principal officers, their families, or controlled corporations; using property/income/seed capital for purposes other than those for which organized; or engaging in illegal/contrary to law, public order or public policy activities.
Yes. Violation is a ground for withdrawal of accreditation and revocation of the NGO’s certificate of registration. Additionally, any donor found to have participated in or consented to the violation shall be deprived of the tax benefits; the limited or full deductibility is disallowed and donor’s tax due on the donation (with increments/penalties) is assessed, in addition to other administrative or criminal penalties.
It took effect 15 days after publication in the Official Gazette or in any newspaper of general circulation in the Philippines.