The Bureau of Internal Revenue (BIR) reminded Sunday corporations and individuals that cash and goods given to Ondoy flood victims are subject to donor's tax if they declare such donations in their 2010 income tax returns (ITR).

The BIR issued the reminder as thousands of donors and calamity victims asked the bureau to set aside its strict requirements in the payment and collection of donor's tax due to the urgency of the situation and encourage more people to extend financial assistance to the needy.

Quezon City Revenue Regional Director Antonio Montemayor explained that under the tax code a donor is allowed to claim 100 percent of his donation as part of his allowable expenses in his ITR provided he reports such expense and pay the donor's tax.

The tax is equivalent to 30 percent of the donation if the receiver is a stranger to the donor and a graduated rate from two to 15 percent if the donee is a relative of the donor.

Under Revenue Regulations 13-98, the donations can be claimed as allowable expense in the ITR provided such donations are coursed to donee-institutions which are certified as non-stock and non-profit organizations.

Montemayor said the law has to be applied "otherwise we will be accused of negligence."

However, he said that if Congress finally approves a bill proposed by Sen. Miriam Defensor Santiago on the relaxation of the donor's tax law then the BIR management will follow it.

The revenue regulation also stipulates that accreditations of donee organizations must come from selected agencies such as the Department of Social Welfare and Development, Department of Science and Technology, Philippine Sports Commission, and Commission on Higher Education.

The BIR came out with the regulations on donations to minimize if not stop tax evasion racket by using the donor-donee scheme to evade payment of correct income taxes, using such foundations as tax shelters.

There have been instances that some unscrupulous individuals apply the donor tax schedule in the sale and transfer of real estate properties to evade payment of higher capital gains tax.

Records showed that some 24,000 donor's tax returns were filed last year from which more than P500 million was raised by the government.