The Bureau of Internal Revenue (BIR) issued Revenue Regulation 13-2025 to simplify the process in availing tax incentives under the Adopt-a-School Act of 1998 (Republic Act 8525) last March 31, 2025. The regulation provides clearer guidelines on the availment of tax incentives for private entities that support education through donation, partnerships, and training with public institutions.
Under RR 13-2025, a private entity that enters into an agreement with a public school to provide assistance, support, or donation (referred to as an Adopting Private Entity) may be entitled to the following tax incentives:
-An additional deduction of 150 percent from the gross income of the amount of donation or contribution, provided it is, actually, directly and exclusively incurred in the program;
-Exemption from donor’s tax;
-For foreign donations, any VAT or excise tax shall be shouldered by the appropriate government agency (i.e., the Department of Education, Commission on Higher Education or Technical Education and Skills Development Authority); and
-For local donations considered as a “transaction deemed sale,” shall be subject to VAT.
Otherwise, such donations are not subject to VAT.
These tax incentives are granted in addition to the regular allowable business expense deductions allowed under the National Internal Revenue Code (NIRC), as amended.
To avail of the incentives, the taxpayer must attach the original or certified true copies of the following documents to the Donor’s Tax Return and Income Tax Return:
1. A duly notarized agreement between the Adopting Private Entity and the public school,
2. A duly notarized Deed of Donation
and Acceptance,
3. A Sworn Declaration issued by the authorized officer of the Adopting Private Entity as to the direct connection or the relation of the expenses being claimed as a deduction/donation.
Additionally, the Adopting Private Entity must retain the corresponding official invoices and other supporting documents for purposes of BIR post-audit.
The regulation offers a clearer and more straightforward process for private entities to claim tax benefits tied to their contributions. This can lead to more consistent support for public schools and learning institutions, enabling them to access resources, upgrade facilities, and offer enhanced learning opportunities.
Please be guided accordingly.
Source:
P&A Grant Thornton
Certified Public Accountants