BIR chief: Donations are tax-exempt if coursed through right agencies

Foreign donations pouring in for the victims of Typhoon Yolanda are exempt from taxes and import duties if channeled through certain government agencies and state-accredited groups, the country's tax chief said Thursday.

Bureau of Internal Revenue chief Kim Henares said that under Section 18 of Republic Act 10121 or the Philippine Disaster Risk Reduction and Management Act of 2010, international humanitarian assistance in the form of relief goods are exempt from import duties and value-added tax (VAT).

Section 18 of RA 10121 authorizes imported relief goods in accordance with Section 105 of  the Tariff and Customs Code of the Philippines as amended, which exempts these goods from import duties upon compliance with regulations set by the Bureau of Customs.

Henares stressed that the foreign aid would only be duty-exempt and VAT-free if coursed through accredited relief agencies like the Department of Social Welfare and Development (DSWD) and the National Disaster Risk Reduction and Management Council (NDRRMC).

"Kung ang goods ay magko-cross ng border, kailangang ido-donate mo sa accredited relief organization accredited by the DSWD and NDRRMC," Henares said.

She said the public can coordinate with the DSWD and the NDRRMC for a list of accredited foundations and non-government organizations.

The VAT on the foreign aid would instead be shouldered by the Philippine government through via budget reports and the tax expenditure fund from the General Appropriations Act, said Henares.

Meanwhile, non-imported donations will still be exempt from donor tax. "Basta dapat may accreditation iyan. Accredited dapat iyan. Tapos iyong donation na iyon, dapat documented at ginawa mo rin sa accredited agency, deductible din yun as an expense," Henares said.

Tax deductions for uninsured businesses

Traders who lost their businesses in the calamity can avail of tax deductions so long as their businesses are not covered by insurance.

"But you have to substantiate and properly document. Kailangan it is relating to the business at talagang nawala at hindi siya insured in the sense na kunyari ininsure mo at P100 million at ang loss mo ay P200 million, at binayaran ka ng insurance company ng P100 million, ang puwede mo lang i-deduct P100 million," she said.

According to the Department of Foreign Affairs, foreign relief and cash assistance pouring into the Philippines reached P3.8 billion as of Wednesday.

Philippine authorities estimate that more than more than 1.7 million families have been affected by the typhoon, said to be one of the most powerful cyclones on record.

The latest government update pegged the number of Yolanda fatalities at 2,357, with 3,853 injured and 77 missing as of Thursday morning. Some officials, however, have projected that the tally of fatalities could go up as high as 10,000 if all can be counted. — BM, GMA News