A Guide to Strategic Corporate Giving in the Philippines.pdf

The Benefits of Corporate Giving
Business does not live by profit alone.
Today it is commonplace that profit should not be the sole pursuit of
business. Like any other sector of society, the corporate world, too, has
responsibilities toward the larger society of which it is a part. Nor do
companies who strive to discharge these responsibilities necessarily feel the
pinch on their bottom line. In fact, the growing consensus in the corporate
world is that the pursuit of profit and the assumption of social
responsibilities are not only compatible, but even interdependent goals.
“Doing well by doing good” is how some companies have defined this
business principle.
Corporate Social Responsibility (CSR) or Corporate Citizenship (CC) is
a business principle proposing that the long-term interests of business are
best served when its profitability and growth are accomplished alongside the
development of communities, the protection and sustainability of the
environment, and the improvement of people’s quality of life.
CSR can take many forms. Among its more common manifestations are:
Managing Workplace Concerns. Management provides an enabling
working environment characterized by programs on health and safety,
family welfare, equal opportunity, rewards and working hours, and others.
The logic is clear: employees who are secure and fairly compensated are
more productive and supportive of the company’s goals.
Corporate-Community Partnerships. Realizing that harmonious
relations with their neighbors make good business sense, companies initiate
comprehensive programs intended to benefit the communities where they
operate.
Environmental Stewardship. Companies take responsibility for any
adverse impact their operations may have on the environment. These efforts
are driven by the demand of communities for a better living environment,
but equally by the awareness that a sustainable environment allows more
cost-efficient business operations.
Social Investment. Companies make strategic contributions to programs
that directly address social needs in the world beyond the companies’
immediate environment. These contributions take many forms and support

a wide variety of programs. Often called corporate giving, this
demonstration of corporate citizenship is perhaps the most widely practiced.
Corporate giving provides the corporate donor many long-term benefits:
v It produces goodwill, and enhances a company’s reputation and
standing in society.
v It boosts corporate name awareness and product recognition.
v It provides a matrix for developing a continuing relationship with
community officials and leaders.
v A reputation for social responsibility enhances customer loyalty.
v A perception of social responsibility also improves employee
commitment and productivity.
In addition, there is an immediate benefit to corporate giving. When done
in the proper way and with the necessary documentation,
v Corporate giving qualifies the corporate donor for tax benefits.
While many companies in the Philippines engage in some form of corporate
giving, not many are aware of the tax benefits accruing to such activities.
Even those who are aware of these benefits often forgo availing of them,
under the impression that the legal and administrative process of so doing
must be complicated and cumbersome. Other Philippine companies are
desirous of engaging in corporate giving but hesitate because of the lack of
information on qualified donee institutions. They worry about giving to
institutions that might eventually show themselves wasteful or ineffective,
or worse, prove to be fly-by-night operations.
It is the aim of this guidebook to provide the information needed to set these
doubts to rest, and thereby encourage more instances of corporate giving.

Opportunities and Challenges
in Corporate Giving
Corporate giving has gone a long way in this country. What began as a
simple dole-out system has now become a vehicle for Corporate Social
Responsibility and Citizenship. Corporations are now concerned over where
their donations are going and how their visions are transformed into
concrete opportunities to serve the community.
For these firms, successful performance involves not only compliance with
the law and public policies, but also requires fulfilling broader
responsibilities. “Firms make charitable contributions, provide direct
assistance to community organizations, support schools, provide employee
and community education programs, establish programs to aid the
disadvantaged, and take measures beyond those required by law to protect
the environment and the safety of employees and customers.”
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There has never been a better time to engage in Corporate Social
Responsibility than today. Not only is the need great and the opportunities
plentiful, but there is in fact a system in place that encourages, and even
rewards, corporations desiring to discharge their social responsibilities.
This has been made especially easy for those desiring to aid the work of
private, non-profit organizations for the welfare of the country’s poor and
disadvantaged.
The Philippines has one of the few legal systems in Asia that recognize the
important role that NGOs and other non-profit organizations play in nation
building.
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Its Constitutional mandate has paved the way for the creation of
a “social demand” for corporate giving in the country. The Philippine
government seeks to fill this demand by promoting the sponsorship of
legitimate and deserving organizations with proven track records. Tax
incentives extended to corporate sponsors are one of the ways by which it
does this. In this encouraging climate, many NGOs and People’s
Organizations have forged fruitful partnerships with the corporate sector,
which has made available to their non-profit partners much-needed financial
resources and technical know-how.
Government efforts to encourage non-profit activity is laudable, but more
can be done in this field.

For one, the extension of tax incentives to compensation earners will be a
most welcome item of tax reform. This will give individual donors an
incentive to have a personal involvement in the welfare of society.
Another area for tax reform involves the more intangible or innovative
modes of corporate giving. Tax incentives have so far focused on the more
concrete manifestations of corporate giving such as cash, personal, and real
properties. Tax laws have yet to provide incentives for corporate giving in
the form of service, skills, and technology. A mechanism for the valuation
of employee volunteer efforts, for instance, would be a step in the right
direction.
The more innovative methods include corporate initiatives in the workplace,
which are becoming increasingly popular. The Philippine government
should take note of this trend and find a place for it in its incentive scheme.
The Dual Training System and Adopt-a-School Laws are tangible
expressions of such a move.
There is certainly some room for improvement, but even now so many
things can be accomplished when the non-profit and corporate sectors work
hand in hand. Corporations that choose to go the extra mile or two will find
not only that they have benefited society, but that they have also
strengthened themselves for the long run.

Frequently Asked Questions
1. What is the PCNC?
The Philippine Council for NGO Certification is a non-stock, non-profit
service organization whose main function is to certify non-stock, non-profit
organizations that meet established minimum criteria for financial
management and accountability in their service to underprivileged
Filipinos. Certified organizations are given official Donee Institution Status
by the BIR upon recommendation of the PCNC.
2. Who can apply for PCNC certification?
Any non-stock, non-profit corporation (as defined in the Corporation Code
of the Philippines) duly registered with the Securities and Exchange
Commission, such as corporate foundations and non-government
organizations, can apply for PCNC certification.
The following organizations can apply for certification:
a. Non-stock, non-profit domestic corporations or associations
organized under Philippine laws and operated exclusively for
religious, charitable, scientific, youth and sports development,
cultural or educational, or social welfare purposes, or for the
rehabilitation of veterans;
b. Civic leagues or organizations not organized for profit but
operated exclusively for the promotion of social welfare;
c. Non-stock, non-profit educational institutions.
3. How is an applicant organization certified by the PCNC?
The certification process involves the following steps:
a. Applicant organization files its Letter of Intent and duly
accomplished Application for Certification for Donee Institution
Status, and gives a down payment of P1,000.00;
b. Applicant organization submits duly accomplished PCNC
survey form with complete attachments, and pays the balance of
the application fee of P9,000.00;

c. The PCNC Secretariat forms the evaluation team and arranges
the evaluation visit;
d. The evaluation team conducts the evaluation visit and the PCNC
Board deliberates on the evaluation team’s recommendation;
e. If the evaluation result is favorable, the PCNC issues a
Certification to the applicant organization and submits
Certification results to the BIR for issuance of the BIR
Certificate of Donee Institution Status. If the evaluation result is
not favorable, the PCNC will inform the applicant organization
of the results and recommendation.
4. How does the PCNC evaluate an applicant organization?
The PCNC evaluates and certifies organizations using the following criteria:
a. Mission and Goals
The mission and goals of the non-stock, non-profit corporation/
NGO should justify its existence. The statements of mission and
goals serve as guideposts for its planning and operations and as a
framework for decision-making.
b. Resources
This criterion focuses on the adequacy of the resources and the
effectiveness of the structure and systems of the non-stock, non-
profit corporation/NGO. Areas evaluated under this criterion
include the organizational structure, and human, financial, and
physical resources.
c. Program Implementation and Evaluation
The non-stock, non-profit corporation/NGO must demonstrate that
it is effectively using its resources to accomplish the purpose for
which it was created. There should be clearly defined policies,
priorities, and guidelines for implementing the various programs
and projects.
d. Planning for the Future
The non-stock, non-profit corporation/NGO must provide
evidence that it has the capability to plan, implement, and monitor
its programs and projects. Evaluation shall provide evidence that

the applicant has mechanisms for planning, implementing, and
monitoring its programs and projects and for ensuring the
continuity of programs/projects even when external funding has
ceased. (Sec 2, BIR Rev. Reg. 13-98)
5. Are all donations to PCNC-certified/BIR-registered private
organizations qualified for full deductibility?
No. Only donations to certified non-governmental organizations (NGOs)
shall be deductible in full. Donations to all other certified private non-
stock, non-profit organizations are entitled to the 5% limited deduction (Sec.
34 (H), Tax Reform Act of 1997). For the distinction between NGOs and
other non-stock, non-profit corporations, see Glossary of Terms.
6. How is the 5% limited deduction computed?
The 5% limited deduction is deducted from the taxpayer’s taxable income as
computed after expenses arising from trade, business, or profession have
been deducted, but before any deductions (full or partial) arising from
donations are made.
For example:
Gross Income P
1,000,000
Deductions (excluding all donations) (600,000)
Taxable income before donations
with limitation
400,000
Allowable donations
With limitation (P400,000 x 5%) P 20,000
Deductible in full
(donation to a certified
NGO, government, etc) 150,000 (170,000)
Taxable income P 230,000
7. Are contributions of service/technical skills deductible
expenses? Can a company monetize time and effort spent for
volunteer work and claim it as a deductible expense?
Tax incentives as provided in law are biased in favor of donations in the
form of tangible assets such as cash and property. The law does not

provide tax incentives for donations in the form of services/technical skills.
Professional and company services can, however, be booked and designated
as cash donations, and as such can be used to claim tax benefits.
8. Is there a deadline for claiming deductions?
Yes. Claims for deductions must be made in the taxable year when “paid
or accrued” or “paid or incurred”, depending on the method of accounting
by which net income is computed. (Sec. 45, Tax Reform Act of 1997)
9. What are the remedies available to the corporation if the
donee institution refuses to issue a Certificate of Donation?
All certified non-stock non-profit corporations/NGOs are required to issue
a certificate of donation (BIR Form 2322) on every donation or gift they
receive. Such certificate shall be accomplished by the said certified non-
stock non-profit organization/NGO in triplicate and distributed within 30
days after the receipt of the donation. (Sec. 3, Rev. Regulation 13-98)
Refusal to issue the Certificate of Donation can be a ground for revocation
by the donor of the donation. Furthermore, such refusal being a violation
of the provisions of the law warrants PCNC’s canceling the organization’s
certification and revocation of the BIR’s Certificate of Registration.
10. Can a corporation revoke a donation to a donee institution?
A corporate donor can revoke a donation to a donee institution when the
donee fails to comply with any of the conditions imposed by the donor.
The property donated must be returned to the donor. Depending on the
cause for the revocation, donor may also claim for damages. (Art. 764,
New Civil Code of the Philippines)
11. Can a corporation set the terms and conditions in a donation?
Yes. A corporate donor can set terms and conditions to effect a donation
provided that they are not contrary to law, public policy, or public order.
For purposes of complying with the requirements of the BIR, the donation
is assumed to take effect upon the occurrence of or compliance with the
conditions set forth in the deed of donation.
12. What happens when deductible donations are pre-terminated
and monies are returned to the donor?

Donations that are revoked or pre-terminated would revert to the situation
as if no donation were made. Accordingly, taxable income would not have
been reduced by the amount of donation and the donor would have
become liable for income tax based on a higher tax base. The donor
would have to file an amended income return reflecting the higher taxable
income and tax obligation.
13. What are the rules governing “willed donations”?
Donations that are contained in a testamentary will and made effective at
the time of the testator’s death are subject to the laws on succession
(testamentary) and are accordingly subject to estate taxes.

S T E P 1
asking the strategic questions
The decision to engage in corporate giving is really a series of linked
decisions, and wise decision-makers will consider all aspects before
committing to a course of action. They must make a conscious effort to
relate corporate goals and resources to identified donee needs, often asking
the following questions:
v What are our business interests?
v What form of corporate giving will promote and enhance our
business interests?
v What form of corporate giving will contribute to our
company’s continued viability, competitiveness, and
corporate health in the long term?
v How will our intended donee assist us in achieving our
business goals?
v What kind of strengths and resources do we have?
v What form of corporate giving will make use of our strengths
and resources to maximum effect?
v What kind of donee organization will benefit the most from
our strengths and resources?
v What stakeholder areas do we want a role in and serve?
v What philanthropic initiatives do we want to be known for?
These questions must be answered by the corporate decision-makers
themselves, and this guidebook cannot pretend to help them in that task.
Instead, this guidebook seeks to help the corporate donor to make informed
decisions in those areas where Philippine law may have something to say.
These include decisions about the identity of the donee, what forms
donations may take, how much may be given, and so on. This guidebook
also contains information about the tax benefits corporate donors are entitled
to, and what they must do to claim them.
The first legal question that arises is: Who is qualified to be a corporate
donor?

S T E P 2
qualifying as a corporate donor
All Philippine corporations, either de facto or duly registered with the
Securities and Exchange Commission (SEC), may engage in
corporate giving for any purpose that is not contrary to law, public
morals, public order, or public policy.
A corporate donor does not qualify for tax benefits, however, until
certain other conditions are met. These are listed and explained in
Step 7: Claiming Tax Benefits.

S T E P 3
deciding on the donee
The choice of donee is perhaps the most basic decision to make, as
it strongly influences the other decisions relating to corporate giving.
At the same time, the corporate decision-maker certainly wants to
optimize the value of the donation. Thankfully, there are mechanisms
for ensuring that one’s donations are put to proper use. The
corporate donor certainly has the option of setting up a monitoring
system, with mandatory project and site visits and regular reports
from their beneficiaries. The safest and best way, however, is to give
donations only to qualified donees.
Q U A L I F I E D D O N E E S
1. Philippine Government
Donations may be made to the Philippine government or to any of its
attached agencies or political subdivisions, including fully-owned
government corporations. Donations may also be made to trust funds
established for highly specialized areas of concern, such as the
People Development Trust Fund (PDTF) , the Air Quality Management
Fund , and the Ancestral Domain Fund .
Corporations donating to the Philippine government are entitled to
deductions from taxable income and exemption from the donor’s tax.
2. Academe
Corporations may donate to private and public educational
institutions.
Corporations donating to educational institutions are entitled to
exemption from the donor’s tax and to the usual deductions from
taxable income. In addition, the Adopt-a-School Act of 1998 (RA
8525) entitles the donor to an additional deduction of 50% of actual
expenses incurred in supporting or adopting the school.
3. Foreign Institutions or International Organizations
These organizations are considered qualified donees only insofar as
the donations to them have been earmarked specifically for activities
in pursuance of or compliance with agreements, treaties, or
1
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commitments between them and the Philippine government, or for
activities required to comply with special laws.
Corporations donating to these organizations are entitled to deductions from
taxable income and exemption from the donor’s tax.
4. PCNC-Certified Organizations
The Philippine Council for NGO Certification (PCNC) is a non-stock,
non-profit corporation authorized by the Department of Finance
(DOF) to evaluate and certify, according to a set of rigorous
standards, NGOs and other non-profit organizations applying for
donee institution status with the DOF-BIR. PCNC certification
indicates that these organizations are legitimate, viable, and
deserving of support and funding. Organizations certified by the
PCNC are then issued a Certificate of Donee Institution Status by the
BIR. (See Appendix A and Questions 1 to 4 in the Frequently Asked
Questions for more information on the PCNC certification process
and criteria.)
The PCNC certifies the following:
a. Non-stock, non-profit corporations or associations organized
and operated exclusively for religious, charitable, scientific,
athletic, or cultural purposes or for the rehabilitation of
veterans, no part of whose net income or assets inures to the
benefit of any member, organizer, officer, or any specific
person (Section 30 (e) Tax Code of 1997);
b. Civic leagues or organizations organized and operated
exclusively for the promotion of social welfare and not for
profit (Section 30 (g) Tax Code of 1997);
c. Non-stock, non-profit educational institutions (Section 30 (h) Tax Code
of 1997).
Corporations donating to PCNC-certified organizations are entitled to
deductions from taxable income and exemption from the donor’s tax.
5. Other Non-Stock, Non-Profit Organizations
There are also a number of non-stock, non-profit organizations
without PCNC NGO certification to which corporations can donate.
Some of these have accreditation from Local Government Units
(LGUs) and certain government agencies, such as the Department of

Science and Technology (DOST), the Department of Social Work and
Development (DSWD), the Department of Health (DOH), and the
Department of Environment and Natural Resources (DENR). Each of
these agencies has its own standards of accreditation. Organizations
so accredited are qualified to participate in the programs of the
accrediting agencies.
Corporations donating to these organizations are entitled to deductions from
taxable income and to exemption from the donor’s tax.
For more detailed information on the conditions for claiming the different
types of tax benefits, see Step 7: Claiming Tax Benefits.
L I S T I N G S O F Q U A L I F I E D
D O N O R S
Various private and government agencies maintain listings of private
organizations eligible for donations. LGUs and government agencies
such as the DOST, the DSWD, the DOH, and the DENR maintain lists
of qualified organizations within their areas of concern. It would be
efficient for the corporate donor to approach the agencies whose
programs are in line with the company’s philanthropic focus and
business interests. Various private coalitions and umbrella
organizations also serve as good sources of information on legitimate
and credible prospective beneficiaries. Examples of these are the
Coalition of Development NGOs (CODE-NGO), the Association of
Foundations (AF), the League of Corporate Foundations (LCF), and
the Philippine Business for Social Progress (PBSP).
R E G U L A T E D D O N A T I O N S
Certain donor corporations intending to give donations to certain
donees must first secure the permission of certain government
institutions. For example, donations by foreign companies and
entities to labor organizations, cooperatives, credit unions, and
institutions engaged in research, education, or communication in
relation to trade union activities must have the prior permission of the
Secretary of the Department of Labor and Employment (DOLE).
Donations for purposes of partisan political activities are prohibited when
made by the following corporations:
1. Financial institutions;
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2. Operators of public utilities or companies possessing or exploiting the
country’s natural resources;
3. Corporations holding contracts or subcontracts to supply the
government or any of its subdivisions with goods or services to
perform construction and other works;
4. Companies with franchises, incentives, exemptions, allocations, or
similar privileges or concessions granted by the government or any of
its institutions;
5. Corporations that, within one year prior to the date of national or local
elections, have been granted government loans or accommodations
in excess of P100,000;
6. Educational institutions with public funding of not less than P100,000.
Donations contrary to law, morals, public order, and public policy are
prohibited.
(Appendix C contains information on regulated donations in table form.)

S T E P 4
deciding what to give
The following are the different forms that deductible donations have taken,
with examples:
1. Cash
2. Real property
3. Personal property
a. shares of stock
b. art works
c. insurance policies
d. vehicles
e. clothing
f. books
4. Company products, supplies, and equipment
a. furniture
b. computers
c. office supplies
The following types of donation are not deductible:
5. Professional services and employee expertise
a. legal assistance
b. tax, business, and financial advice
c. strategic planning
d. management consulting
6. Company services
a. financial and administrative support
b. mailing services and computer services
c. office space
d. real estate lease
It is possible, however, to designate and book professional,
employee, and company services as cash donations. In this way they
may be claimed as deductions from taxable income.

The following type of donation is a special case:
7. Company-employee donations
Companies can increase the value of their corporate giving by
encouraging employees to make donations, which the company will
then match with a contribution of its own. For this type of donation,
only the company’s share of the donation is deductible.

S T E P 5
deciding how to give
Companies may make their contributions in one or more of the
following ways:
1. Direct contributions
The company directly makes the contribution to a government or
private institution or sets up a fund to be administered by a non-
profit or nongovernmental partner institution. The contribution may
be unrestricted, to be used for any purpose determined by the
donee; or it may be restricted, to be used by the donee solely for
the specific purpose or program identified by the donor company.
The donor company may, for instance, require the donee to use
the donation specifically for employee welfare, environmental
protection, livelihood programs, the purchase of real estate, or
other such purposes.
2. Company Foundation
The company creates a foundation that it then supports in any
number of ways. For instance, it can give a substantial
endowment at the outset, or piecemeal over a period of years. Or,
it can set aside a percentage of net income for the foundation’s
yearly project and operating costs. It can also support the
foundation with contributions in the form of facilities and
equipment, but require the foundation to raise its own project
funds.
The foundation is a legal entity separate from the company with its
own by-laws and governance structure.
3. Government Trust Funds
The company donates to government-created trust funds
established for highly specialized areas of public concern.
Examples include the Air Quality Management Fund and the
Ancestral Domain Fund.
4. Membership in a Coalition or Business Organization
The company joins a social venture or a civic or business
organization, such as the Philippine Business for Social Progress,
which manages and administers the pooled annual committed

contributions of member companies for programs and projects
jointly identified by the organization and member companies.

S T E P 6
deciding how much to give
There is no legal limit to the amount that companies can donate.
(Documentation requirements increase, however, beyond a certain
amount of donation. See Exemption from Donor’s Tax under Step 7:
Claiming Tax Benefits.) In practice, companies often use the
following in determining how much to give:
1. Percentage of income
Companies donate a percentage of their income that allows them
to maximize tax benefits.
2. Past experience based on profitability targets
Companies donate such amounts that experience has shown are
consistent with their financial targets.
3. Response to requests for donations
Companies can choose to contribute the amount the donee
actually requests and needs, provided this falls within the
company’s discretionary budget and fiscal policies.

S T E P 7
claiming tax benefits
To encourage corporate giving, the Philippine Government gives tax
incentives to corporations and individuals engaged in business or in
the practice of profession who donate to public or private institutions.
Corporations qualify for tax incentives when they comply with
substantive and procedural requirements imposed by the Tax Code of
1997; the Corporation Code of the Philippines; and other pertinent
laws, rules, and regulations.
Basic among the requirements are the following:
v The corporate donor must be a BIR-registered taxpayer.
v Donation must be evidenced by legal documents and
supported by duly accomplished BIR forms; specifically,
BIR Form 2322 (Certificate of Donation) and BIR Form
1800 (Donor’s Tax Return).
Documentation is essential both for a corporate donor’s record
purposes and for claiming tax benefits. The basic documents are the
following:
v A formal donation is evidenced by a Deed of Donation and
Acceptance executed by the donor and donee
corporations, and handed over by the former to the latter.
v Receipt of donation is evidenced by an Official Receipt and
a Certificate of Donation (BIR Form 2322) issued by the
donee to the donor.
v In appropriate cases, the donor (with the assistance of the
donee) prepares a Notice of Donation for filing with the
BIR.
(See Appendix D for more information on documentary
requirements.)

Other requirements have to do with the nature of the donee
organizations and are explained below.
K I N D S O F T A X B E N E F I T S
The Tax Code of 1997 provides two basic incentives for corporate
donors:
1. exemption from the donor’s tax, and
2. deductions from taxable income.
(Appendix B presents information on these basic tax incentives in
table form.)
E X E M P T I O N F R O M D O N O R ’ S
T A X
Normally, corporate donors are required to pay a tax amounting to
30% of the value of the donation. (See Valuing Donations on page 20
for how the different forms of donation are valued.) Corporations
donating to the following beneficiaries are, however, exempted from
paying this tax:
1. Philippine government or any of its attached agencies or political
subdivisions, including fully-owned government corporations;
2. Private and public educational institutions;
3. Foreign Institutions or International Organizations;
4. PCNC-certified organizations; and
5. Non-PCNC-certified non-stock, non-profit organizations
established for religious, charitable, cultural, social welfare, and
research purposes.
The process of claiming exemption from the donor’s tax depends
on the nature of the donation. The corporate donor must:

1. For cash and personal properties
a. Execute a Deed of Donation and Acceptance, with a
documentary stamp tax of P15.00 affixed, to be duly
accepted by the donee institution;
b. File a Donor’s Tax Return (BIR Form No. 1800) within 30
days from notarization of the Deed of Donation and
Acceptance at the Revenue District Office (RDO) where its
principal place of business is located; and
c. Submit to the BIR within 30 days from date of donation a
Notice of Donation stating the nature, amount, donee, and
purpose of the donation, for donations greater than One
Million Pesos (P1,000,000).
2. For shares of stock
Acceptance at the RDO where its principal place of
business is located;
Notice of Donation similar to that used for cash and
personal properties, for donations worth more than One
Million Pesos (P1,000,000); and
d. Surrender the duly endorsed stock certificate and Deed of
Donation to the Corporate Secretary of the issuing
corporation for purposes of registration of the stocks in the
name of the donee institution.
3. For real property

Acceptance at the RDO where its principal place of
business is located;
Notice of Donation similar to that used for cash and
personal properties, for donations worth more than One
Million Pesos (P1,000,000);
d. Secure a Certificate of Authority to Register (CAR) from
the BIR;
e. Update payment of real property taxes and secure a Tax
Clearance Certificate from the Office of the Assessor;
f. Pay the transfer and registration fees;
g. Surrender the old title and apply for a new title with the
Register of Deeds, presenting the following:
• notarized Deed of Donation and Acceptance
• Certificate of Authority to Register (CAR)
• Tax Clearance Certificate
• original copy of the Transfer Certificate of Title (TCT)
• tax declaration issued by the Office of the Assessor
• real estate tax receipts; and
(See Appendix I for more information on the registration of real
property in the name of the donee.)
h. Apply for a new tax declaration in the name of the donee
corporation with the Assessor’s Office.
(For flowchart versions of these processes see Appendices F, G, and
H.)
D E D U C T I O N S F R O M
T A X A B L E I N C O M E
Contributions made to qualified beneficiaries can be charged as
expenses, thus lowering the donor company’s taxable income for the
year. A donor company can claim either full or limited deduction,
depending on the nature of the donee institution.
1. Full deduction

Corporations may claim as deduction from taxable income (before
any other full or limited deduction is deducted from this amount)
the full amount of donations made to the following:
a. Government of the Philippines or any of its agencies or
political subdivisions, including fully-owned government
corporations, if donation is earmarked specifically for priority
activities in education, health, youth and sports development,
science development, culture development, or economic
development in accordance with the National Priority Plan of
the National Economic Development Authority (NEDA);
b. Foreign institutions or international organizations, if donation is
earmarked specifically for activities in pursuance of or
compliance with agreements, treaties, or commitments
between the Philippine Government and these institutions, or
for activities required to comply with special laws;
c. PCNC-certified nongovernmental organizations (NGOs)
subject to Revenue Regulations Nos. 13 – 98 implementing
Section 34 (H) of the Tax Code of 1997.
2. Limited deduction
Corporations may claim up to a 5% deduction from taxable income
(before any other full or limited deduction is deducted from this
amount) for donations made to the following:
a. Government of the Philippines or any of its agencies or
political subdivisions, if donation is earmarked or used for any
public purpose other than those in the National Priority Plan of
the NEDA;
b. Social welfare institutions duly licensed by the Department of
Social Welfare and Development;
c. Non-stock, non-profit corporations or associations (other than
PCNC-certified NGOs) organized and exclusively operated for
religious, charitable, scientific, cultural, educational, youth and
sports development, social welfare, or research purposes, or
for the rehabilitation of veterans.

Limited deduction means that corporations donating to the
above donees are only allowed to claim the full value of their
donation as a deduction from taxable income insofar as that
value does not exceed 5% of their taxable income. This
means that a donation with a value of, say, 7% of taxable
income entitles the donor only to a 5% deduction. The extra
2% cannot be claimed as a deduction.
A full deduction (arising from another donation) can, however,
be claimed on top of a 5% deduction. Question 6 in the
Frequently Asked Questions contains a sample computation.
Donor corporations can claim full or limited deductions or both when
they file their annual income tax returns at the Revenue District Office
(RDO) where their principal place of business is located.
Although the annual return reflects all donations given over the entire
year, donor corporations must still file quarterly returns reflecting
donations given for the quarter covered.
(See Appendix E and Question 8 in the Frequently Asked Questions for
requirements with regard to the filing of claims for deductibility.)
V A L U I N G D O N A T I O N S
Donations are valued in the following ways:
1. Cash – the amount of the donation
2. Real property – the zonal value at the time of donation
3. Personal property – the acquisition cost; or, if used, the
depreciated or book value. Art pieces such as paintings,
sculpture, or jewelry are, however, valued at acquisition cost, as
their value usually appreciates over time.
4. Professional and company services – These should be booked
and designated as cash donations; otherwise they are not
deductible from taxable income.
A D D I T I O N A L I N C E N T I V E S
U N D E R S P E C I A L L A W S

Special laws provide additional tax benefits to corporations
engaging in certain forms of corporate giving:

A Guide to Strategic Corporate Giving in the Philippines.pdf

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