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Republic of the Philippines > are MAY 30
HOUSE OF REPRESENTATIVES ie
Quezon City
SEVENTEENTH CONGRESS &
First Regular Session taney oS

HOUSE BILL No. 5785

Introduced by Representatives HORACIO P. SUANSING, JR.
and ESTRELLITA B. SUANSING

AN ACT
PROVIDING FOR TAX RELIEF IN TIMES OF CALAMITY

EXPLANATORY NOTE

The Philippines endured 274 typhoons and other natural disasters between
1995 and 2015, making it the fourth most disaster-prone country in the world
according to the report by the United Nations Office for Disaster Risk Reduction
(UNISDR). The report also showed that the Philippines is among the ten countries in
the world with the most number of people affected by calamities. Further, according
to the National Disaster Risk Reduction and Management Council (NDRRMC), just
between February 2015 and March 2016, a total of 6 provinces, 12 cities, 17
municipalities and 2 barangays have declared a State of Calamity because of the El
Nifio phenomenon. Given our country’s vulnerability to natural disasters, the
government needs to strengthen its disaster prevention and response program, and
at the same time enact measures that would expedite the flow of relief and the
recovery of calamity victims. An act that would provide for tax relief in times of
calamity could be one of these measures.

As a rule, one who claims exemption from tax must show proof that
exemptions apply by express mandate of the law. Under our current tax system, tax
telief is given only to individuals and corporations that incur casualty losses on
Properties that are actually used in business, to the extent that these are not
compensated for by insurance or other forms of indemnity. Generally, under the
Local Government Code, only the following are exempt from payment of real
Property tax: government properties; religious, charitable, and educational
institutions; local water utilities machinery and equipment, registered cooperatives;
and machinery and equipment used for pollution control and environmental
protection. This proposed measure intends to mandate a two (2) year real property
tax exemption to calamity victims from the date of the declaration of a State of
Calamity by the proper local Sanggunian. This measure aims to facilitate the
recovery and rehabilitation of calamity victims by relieving them of substantial tax
liabilities.

Further, during times of calamity, most notably in the wake of Typhoon Ondoy
and Typhoon Yolanda, foreign and local government and private entities have been
generously giving large sums to aid calamity victims. According to the records of the
Foreign Aid Transparency Hub (FAITH), in the wake of Typhoon Yolanda, the


Philippines received a total of USD 386.2 million in foreign aid, 86 percent of which
or USD 330.8 million were coursed through non-government organizations and
multilateral agencies. Further, out of the total USD 386.2 million, about USD 26.9
million in cash and USD 28.5 million in non-cash donations were received by the
National Government.

Regrettably, some bureaucratic roadblocks have impeded the flow of these
donations. Multinationals and some individuals who intended to donate huge sums
had to face paying a substantial donor's tax. Under the law, donations from local and
foreign entities may be exempted from taxes and import duties, but only if these are
channeled through certain government offices, such as the Department of Social
Welfare and Development (DSWD) and the National Disaster Risk Reduction and
Management Council (NDRRMC), and state-accredited organizations. However,
these exemptions are not given automatically — in order for these donations to be tax
exempt, at the minimum, the donor would still need to obtain a BIR Ruling confirming
that the donation is exempted from donor's tax. Obtaining the said BIR approval
would entail the submission of documents substantiating the donation, which can
prove burdensome to the donor. This issue is further compounded by the fact that
not all organizations that are involved with relief operations are accredited by the
State, and thus, donations coursed through these channels would be subjected to
donor's tax. This bill aims to address these impediments by allowing for the
automatic exemption from donor's tax, provided that not more than 10% of the
donation would be used by the donee organization for administrative purposes. Once
enacted, donors would no longer need to pay any donor's tax nor undergo the
required accreditation before exemption is applied.

In view of the foregoing, the immediate approval of this bill is earnestly
‘sought.

This bill was originally filed by Senator Miriam Defensor Santiago during the
Fourteenth Congress and refiled during the Sixteenth Congress, and is based on the
response of the United States Congress in granting similar tax treatments in the
wake of Hurricane Katrina.

woraciEPEaansinc, JR. ESTRELLITA B. SU: ING
2nd Distri€t of Sultan Kudarat 1st District of Nueva Ec


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

5785

HOUSE BILL No, ~~

Introduced by Representatives HORACIO P. SUANSING, JR.
and ESTRELLITA B. SUANSING

AN ACT
PROVIDING FOR TAX RELIEF IN TIMES OF CALAMITY

Be it enacted by the Senate and the House of Representatives of the
Philippines in Congress assembled:

SECTION 1. Calamity defined. — For the purposes of this Act, “Calamity”
shall be defined as a state of extreme distress or misfortune, produced by some
adverse circumstance or event or any great misfortune or cause or loss or misery
caused by natural forces.

SECTION 2. Effect of Declaration of Calamity. — A declaration of a State of
Calamity by the proper local Sanggunian shall make effective the following tax relief:

A) The real property tax in the affected area shall not be assessed and
collected for two fiscal years, starting from the date of the declaration of a
State of Calamity;

B) Any donation in the name of any organization that declares that the funds
donated shall be in favor of the victims of the calamity shall be exempt
from donor's tax. This exemption from the donor's tax shall automatically
apply and the Bureau of Internal Revenue shall not require any
accreditation requirements: Provided, however, that not more than 10% of
the said donation shall be used by the donee organization for
administrative purposes.

SECTION 3. Implementing Rules and Regulations. - The Bureau of
Internal Revenue (BIR) shall within thirty (30) days from the effectivity of this Act,
promuigate the rules and regulations necessary for the effective implementation of
this Act.

SECTION 4. Separability Clause. — If any provision of this Act is held invalid
or unconstitutional, the same shall not affect the validity and effectivity of the other
provisions hereof.

SECTION 5. Repealing Clause. — All laws, decrees, orders, and issuances,
of portions thereof, which are inconsistent with the provisions of this Act, are hereby
repealed, amended or modified accordingly.


SECTION 6. Effectivity Clause. — This Act shall take effect fifteen (15) days
after its publication in the Official Gazette or in two (2) newspapers of general
circulation.

Approved,