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BIR chief: Foreign donations subject to VAT

Generosity from foreign governments and relief organizations, in this time of need, is to be repaid by the Aquino government with a big tax slap on their donations for the victims of super typhoon “Yolanda,” Bureau of Internal Revenue (BIR) chief Kim Henares yesterday pronounced.

Henares stressed that only donations made to charitable institutions accredited by the government are officially tax exempt which the Aquino administration, through the BIR chief, makes certain that all donations are directly given to and handled by specific government agencies to avoid donors from paying taxes.
This also means that yet another layer of bureaucratic red tape is added to the already existing red tape that has bogged down delivery of foreign aid. It also portrays the Aquino government as heartless and even greedy, to tax donors whose only intention is to help the suffering starving, homeless and desperate victims of Haiyan.

Speaking to newsmen, BIR Commissioner Henares clarified that under the latest law on value-added taxes only “donations to the national disaster relief and rehabilitation management council is duty-exempt under the provision.”
But government certainly can waive such taxes, that is if there is such a law, since Henares is also known for creating new “laws” unilaterally on taxes, such as taxing allowances, and now donations.
“At the end of the day, there’s really no tax because this is going to be shouldered, if there is any, it’s going to be shouldered by government via budgets report for as long as the donation is made to the NDRMMC. Now for donations made to accredited relief agencies of Department of Social Welfare and Development, it’s the same. It’s duty-exempt and the fund is usually tax exempt. They (foreign donors) should coordinate with DSWD on how to do it so that the VAT can be properly answered for.”
Henares emphasized that the law requires that the “ donation is to accredited registered relief agencies accredited by DSWD or donations made to NDRRMC.
“If the donation is not one of those, it is not duty and VAT exempt.” Henares said these rules apply to importation of goods which come from outside the country to be donated to the Philippines.
“For donations within the Philippines which no longer pass through customs the donation is donor tax free provided it is given to an accredited agency,” she said.
Henares stressed that the said donation provided its documented and handed to an accredited agency is also deductive as an expense by the donor.”
Complaints have been raised by donors that their relief goods for the Haiyan victims are being held up in Customs, apart from the fact that it is agencies such as the NDRMMC and the DSWD that have been proved to be ineffective in distributing these relief goods, apart from politics played in the disribution of aid and relief goods.
Sen. Francis “Chiz” Escudero said he wants a proper accounting from the Commission on Audit (CoA) of all the donations being received by the government.
The chairman of the Senate finance committee has sent a letter to CoA chairman Grace Pulido Tan, seeking a full report on the donations here and abroad extended to the government to ensure proper compliance with existing rules and regulations ahead of the plenary debates on the 2014 spending plan next week.
“Such audit and the respective agencies’ compliance with rules and regulations will help all of us in quelling any anxiety the public may have on the possibility of the aid falling into the wrong hands or not reaching or benefiting the calamity victims,” Escudero said.
All donations to the government are deemed public funds and must be properly accounted for and audited to ease worries of possible misuse, the senator stressed.
At the same time, Escudero asked Budget Secretary Florencio Abad to provide the finance committee with the guidelines and procedures on the acceptance and utilization of donations from donor countries and international organizations for victims of natural disasters.
“We’d like to retrace our steps on how donee agencies comply with the reportorial requirements on acceptance and utilization of donations. GAA mandates that they do so. Fund drives are also governed by presidential decrees and administrative orders. These must be adhered to,” he said.
Escudero added: “Proper accounting and utilization of donations is the best that a country like ours battered by natural disasters can do to match the goodwill of individuals, organizations and foreign countries that come to our aid in trying times.”
“All donations shall be used only for the purpose specified by the donor. Anyone who gambles or takes advantage of money and aid intended to help save lives is a betrayal and must be considered a heinous crime. Every single centavo will decide whether a person may survive or die,” Escudero emphasized.
President Aquino, for his part, thanked foreign donors. As the donations from 40 countries have reached to $95.092 million in cash and kind for relief and search and rescue operations.
“Over the past few days, however, the Filipino people have seen many reasons to be grateful as well. Filipinos at home and abroad have, once more, come together to render aid and assistance to hard-hit areas,” Aquino said.
Aquino said “the thought that the community of nations stands in solidarity with our nation has also greatly eased our burdens”.
Without any hesitation, donor nations and private international organizations have poured in their commitments to send their donations, from cash to food and medical supplies, and dispatch at the soonest possible their human resources to Leyte and Samar provinces.
The Russian Andronov-225, the biggest aircraft in the world has landed in Cebu, as well as other cargo aircraft from Canada and Unites States and those from other countries have lined up along the tarmac in Cebu as the control tower and runway of Tacloban airport is under repair.
The warships of United Kingdom and United States have also docked in the waters of Tacloban for its troops to deliver relief goods and other services needed to ease the suffering of the typhoon victims.
“On behalf of the Filipino people, I thank the governments and peoples of so many nations, 28 as of last count, as well as the donor organizations, who have pledged or already provided assistance, whether technical, financial, or in kind, for the relief and rebuilding efforts that we are undertaking in Leyte, Samar, and other provinces devastated by Haiyan,” Aquino said.
Aquino also expressed his gratitude to the Filipino individuals who in one way or another extended their help to fellow Filipinos.
“The well of strength and compassion that characterizes us as a nation has time and again proven to be bottomless,” Aquino said.
Aquino said “solidarity born of faith and prayer, combined with a steadfast resolve, is showing the world that nothing can make the Filipino spirit yield”.