RECEIVED
AUG 2016
Republic of the Philippines |
House of Representatives
Quezon City

SEVENTEENTH CONGRESS

First Regular Session BILLS “aN D INDEX SERVIC!

House Bill No. 3100

Introduced by Representative Jose Enrique S. Garcia Ill

EXPLANATORY NOTE.

The standard of education must be consistently upgraded to conform to
national development goals. This should be the guidepost in the implementation of
the State policy of delivering quality education at the grassroots level.

It is recognized that technology is valuable in education. However, the
procurement and upgrading of IT hardware is costly, and it has become necessary to
explore other venues to augment the State's efforts in bringing quality education to
students. While there are present initiatives by both the government and private
sectors (particularly through non-stock, non-profit institutions,) such initiatives are still
insufficient, given the existing constraints

In line with this, companies within the Business Process Outsourcing (BPO)
industry have expressed their intent to help improve the technology in public
educational institutions. These companies utilize a significant number of IT
equipment such as computers, monitors and hardware, that are upgraded and
replaced every three (3) years, and which they seek to donate to government
schools

Unfortunately, BPO companies within the special economic zones
(‘ecozones") cannot proceed with the donation and disposal of the used IT hardware
as attendant taxes and levies are prohibitive. Under existing laws and regulations,
these companies enjoy exemptions from tax and custom levies on the procurement
of IT equipment. However, they cannot as easily dispose of the IT equipment as the
taxes and levies that they were previously exempted from, would become payable if
the IT equipment physically leave the ecozone. Donation of unused IT hardware is
also arduous considering the exorbitant taxes involved

As a result, these BPO companies are resorting to stockpiling and/or
destroying otherwise fully functional IT equipment instead of simply donating the
equipment to worthy institutions. At present, there is an already large (and still

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growing) surplus of used IT equipment that remain unutilized by these companies,
but are in full working order and still suitable for other purposes.

By providing a tax efficient means of disposing used IT equipment to
educational institutions, BPO companies will have better inventory-clearing
mechanisms in the form of donating their used, but fully functional, IT equipment to
under-resourced educational institutions which would otherwise be stockpiled or
destroyed. Not only is this measure in support and recognition of the BPO industry, a
sector that has been contributing a significant part of the Gross National Product for
the past decade, but also a substantial help for the State to better achieve its
constitutional mandate of providing quality education to its citizens without the need
to access tax payer funds.

This proposed bill also seeks to help address the issue on funding available to
schools and other state-run organizations. In recent budgetary reallocations, the
Senate realigned P2.67 billion of the proposed 2015 national budget to the
Information and Communications Technology Office for the implementation of free
WL-FI Internet in public places. Unfortunately, the bursary for this was sourced from
the Digitization Empowerment Program, which was primarily established to support
and develop access to basic education through purchasing computers, operating
systems and basic software, for educational institutions. Such reallocation is a big
setback to educational institutions as it threatens the proper provision of schools with
adequate IT equipment

This intended bill seeks to encourage full support of BPO companies in
improving the technological situations of government-run schools and institutions by
granting them full tax exemptions from donations made, and giving allowable
deductions from their taxable income on their donations, grants, endowments or
contributions in the form of IT equipment intended to be used actually, directly and
exclusively for educational purposes by the recipient educational institutions.

Support for the enactment of this measure is earnestly requested.

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

REP, JOSE ENRJQUE S. GARCIA Ill
Second District, Bataan


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Republic of the Philippines
House of Representatives
Quezon City

SEVENTEENTH CONGRESS

First Regular Session

House Bill No. 3100

Introduced by Representative Jose Enrique S. Garcia Ill

AN ACT EXEMPTING FROM TAXATION INFORMATION TECHNOLOGY (IT)

HARDWARE DONATIONS FROM PEZA REGISTERED COMPANIES IN THE

OUTSOURCING INDUSTRY FOR THE BENEFIT OF PUBLIC EDUCATIONAL
INSTITUTIONS

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

SECTION. 1. Declaration of Policy. - It is the policy of the State to encourage the
participation of the Information Technology & Business Process Management (IT-
BPM) industry towards the development of our education through the voluntary
sharing of resources.

SEC. 2. Definition of Terms — For purposes of this Act, the following terms are
defined as follows:

a) IT Hardware - all physical aspects of computers, telecommunications, and
other devices which include, but are not limited to the computer proper,
cables, connectors, modems, power supply units and peripheral devices
such as keyboards, mouse, audio speakers, printers and the like;

b)

Public Educational Institutions - all organizations established by the
government solely for the education of students, whether primary,
secondary or tertiary level;

°)

Tax Exemption — shall include Donor’s Tax and all other taxes and fees
that may arise, and are related to, the donation and grant of IT hardware
included under this Act to public educational institutions.

SEC. 3A. Tax Exemption. - Notwithstanding any provision of law to the contrary, all
IT hardware donated, granted or bestowed to public educational institutions within
the Republic of the Philippines are tax-exempt and deductible from the taxable

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income of the donor; provided that such donations, grants, endowments or
contributions shall be used actually, directly and exclusively for the educational
purposes of the recipient.

SEC. 3B. Impact on Existing Exemptions.— Any exemptions enjoyed by the donor
company under any associated special economic zones will not be impacted by an
action performed by the donor company to effect a donation to the public educational
institution.

SEC. 4. Valuation. - For purposes of this Act, the equivalent monetary value of
properties, donated, granted, endowed, or contributed shall be the certified book
value of the property, as determined by the Secretary of Finance and Approved by
the Bureau of Internal Revenue.

The Department of Budget and Finance, the Bureau of Internal Revenue and the
corresponding Special Economic Zones shall work together and issue the rules and
regulations necessary for the effective implementation of this Act.

SEC. 5. Repealing Clause. — All laws, decrees, orders, rules and regulations or
parts thereof, inconsistent with the provisions of this Act are hereby repealed,
amended or modified accordingly.

SEC. 6. Separability Clause. - If, for any reason, any provision of this Act is
declared to be unconstitutional or invalid, the other sections or provisions hereof
which are not affected thereby shall continue to be in full force and effect.

SEC. 7. Effectivity Clause. - This act shall take effect after fifteen (15) days
following its publication in the Official Gazette or in two (2) newspapers of general
circulation.

Approved.