Religious and charitable institutions
THE Philippines grants both constitutional and statutory benefits to religious and charitable organizations.
Section 28(3) of Article VI of the Philippine Constitution grants religious and charitable institutions exemption from real property tax on all lands, buildings, and improvements, actually, directly, and exclusively used for religious, charitable, or educational purposes. Conversely, real properties of religious and charitable institutions not actually, directly, and exclusively used for religious, charitable, or educational purposes shall be subject to the real property tax (Systems Plus Computer College vs. Caloocan City, GR 146382, Aug. 7, 2003).
On the other hand, Section 30 of the Tax Code states that non-stock corporations or associations organized and operated exclusively for religious or charitable purposes shall be exempted from income tax provided that no part of its net income or asset shall belong to or inure to the benefit of any member, organizer, officer, or any person.
However, income derived from any of their properties, or from any of their activities conducted for profit regardless of the disposition made of such income, shall be subject to Philippine income tax.
Moreover, gifts or donations made in favor of a charitable or religious corporation, institution, or organization shall be exempt from the donor’s tax pursuant to Section 101(A)(3) of the Tax Code. The exemption is subject to the condition that not more than 30 percent of the gifts shall be used for administration purposes (BIR Ruling No. DA-212-02 dated Nov. 21, 2002).
All imported equipment that will enter the Philippines for purposes of religious and charitable activities must generally still be declared (Section 101, Tariff and Customs Code).
However, the following goods imported into the Philippines shall be considered “conditionally free importations” and are therefore exempted from import duties after complying with the formalities prescribed by the regulations as promulgated by the Commissioner of Customs:
Philosophical, historical, economic, scientific, technical and vocational books specially imported for the bona fide use and by order of any society or institution, incorporated or established solely for charitable purposes.
Bibles, missals, prayer books, and other religious books of similar nature and extracts therefrom, hymnal and hymns for religious purposes, specially prepared books, music and other instrumental aids for the deaf, mute or blind, and textbooks prescribed for use in any school in the Philippines: Provided, that complete books published in parts in periodical form shall not be classified therein (Section 105(s) of the Tariff and Customs Code).
Articles donated to public or private institutions established solely for educational, scientific, cultural, charitable, health, relief, philanthropic or religious purposes, for free distribution among, or exclusive use of, the needy (Section 105(u) of the Tariff and Customs Code).
The importation of automatic data processing machines including laptop units, and other computer equipment are also free of customs duties pursuant to Chapter 84.71 of the Tariff and Customs Code.
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