Tax Alerts

Tax incentives for donations of computers and similar equipment for use in teaching and learning in public schools

(Revenue Regulations No. 26-2020 published on October 08, 2020)

This Tax Alert is issued to inform all concerned on the tax exemptions of donations of identified equipment for use in public schools pursuant to Bayanihan to Recover as One Act (Republic Act No. 11494) or the Bayanihan II.

All donations of personal computers, laptops, tablets, or similar equipment (i.e. mobile phone, printer) for use in teaching and learning in public schools for the period from September 15, 2020 to December 19, 2020, shall be entitled to the following tax incentives:

  1. Deductions from gross income for the amount of donation, subject to limitations under Section 34(H) of the Tax Code and the following conditions:

a. Deed of donation shall indicate in details the items donated, its quantity/ number and the amount/ value of the donation;

b. Deduction shall be availed of in the taxable year in which the expenses have been paid or incurred;

c. Taxpayer can substantiate deductions with sufficient evidence, such as sales invoice/s, delivery receipts and other adequate records showing the amount of expenses being claimed as deduction and proof or acknowledgment of receipt of the donated property by the recipient.

Donations shall be valued based on the actual acquisition cost. For equipment that have already been used, the depreciated value should be taken into consideration.

  1. Exemption from donor’s tax;
  2. Exemption from value added tax (VAT) on importation, if imported by the Department of Education (DepEd), Commission on Higher Education (CHED), or Technical Education and Skills Development Authority (TESDA).

If importer/ consignee is other than CHED or TESDA, the importer should present Deed of Donation duly accepted by these agencies for the importations to be VAT exempt. Moreover, the importation shall not be subject to the issuance of Authority to Release Imported Goods (ATRIG) but may be subject to post audit investigation.

  1. Donations of equipment originally intended for sale or for use in the course of business by the donor shall not be treated as transactions deemed sale subject to VAT. Nonetheless, any input tax attributable to the purchase of donated equipment shall still be creditable against any output tax.

Ecozone locators are likewise covered by the above rules.

No prior determination or ruling from the BIR shall be required to avail of the tax incentives.