DOF exempts UP from taxes

The Department of Finance (DOF) has agreed to continuing exempting the University of the Philippines from paying certain taxes.

According to DOF comments submitted to the House ways and means committee on a bill strengthening UP as the national university, under the Philippine Constitution, government educational institutions like UP are exempt from tax and duty.

Revenues and assets of non-stock and non-profit educational institutions used for educational purposes are exempt from taxes and duties.

“Assets should be owned and operated by the educational institution as ancillary activities and are located within the school premises or they are an indispensable requirement to the operation and maintenance of its medical school, in the case of hospital facilities,” the DOF said in its position paper.

The Finance department reiterated that all grants, endowments, donations or contributions used actually, directly and exclusively for educational purposes are also exempt from tax.

Furthermore, the DOF said that importations of articles for educational purposes are also exempt from taxes and duties.

The pending bill proposes the institutionalization of the charter of UP. The bill wants to strengthen the charter for UP to be considered as the premier state university.

The grant of tax exemptions, according to the draft bill is necessary.

Finance Undersecretary Gil Beltran, for his part, recommended that the tax exemptions of the UP system be aligned with Constitutional provisions.

Under the law, educational institutions are exempt from the payment of income tax but are required to pay tax on their income from properties or from any of their activities conducted for profit.

Donations in favor of an educational institution are exempt from donor’s tax provided that such institution is not operating for profit and not more than 30 percent of the donations shall be used for administrative purposes.