Full Deductibility of Certain Contributions
- Not all donations are subject to the percentage limits.
- Donations deductible in full include:
- Donations to the government or fully-owned government corporations aimed at priority national projects in education, health, youth and sports, human settlements, science, culture, and economic development per a plan by NEDA.
- Donations to foreign institutions or international organizations fully deductible under treaties or special laws.
- Donations to certain private foundations meeting specific requirements.
Private Foundations - Definition and Requirements
- Must be non-profit, domestic corporation organized for scientific, educational, charitable, religious, youth and sports, health, social welfare, cultural purposes, or combinations.
- No part of net income benefits any private individual.
- Must utilize contributions directly for their purpose within a set time frame (usually within 15 days after the third month from year end, possible extensions).
- Administrative expenses limited to 30% of total expenses annually.
- Upon dissolution, assets must transfer to similar non-profit organizations or the state for public purposes.
Utilization of Funds by Private Foundations
- Utilization means cash or in-kind payments for foundation’s purposes including administrative expenses.
- Acquisition of assets for use in foundation’s activities counts as utilization.
- Setting aside funds for specific projects is considered utilization if the project can be accomplished better by this method than immediate payment and within a prescribed payment period (not more than 5 years).
- The Minister of Finance issues implementing rules.
Valuation of Non-Cash Contributions
- Non-cash properties donated must be valued according to rules established by the Minister of Finance in consultation with relevant agencies.
Proof of Deductibility
- Deductible contributions must be verified under Minister of Finance regulations to be claimed as deductions.
Implementation of the Act
- The Minister of Finance is tasked with promulgating implementing rules within 90 days after the law's approval.
- Rules must align with national socio-economic development programs.
Re-Qualification of Donee Organizations
- Previously qualified donees must apply for re-qualification with the Commissioner of Internal Revenue.
- Donations made during re-qualification period are still deductible.
Repealing Clause
- Repeals or modifies provisions of other laws allowing full deductibility of donations unless covered by PD Nos. 697 and 698.
- Also repeals or modifies provisions allowing deduction for purchase of cultural properties.
Effectivity
- The Act takes effect immediately upon approval on December 18, 1979.