Tax Deductibility of Charitable Church Donations in the Philippines – A Comprehensive Legal Guide (updated to July 2025)

1. Introduction

Charitable giving to churches is deeply woven into Philippine culture, yet it also intersects with a dense web of tax rules. This article gathers, in one place, every significant constitutional clause, statutory provision, regulation, BIR ruling, and landmark case that affects the income-tax deductibility and donor’s-tax treatment of gifts to churches and religious ministries. The focus is on Philippine law current as of 5 July 2025.

2. Constitutional Foundations

Provision	Key takeaway
Art. VI, §28 (3), 1987 Constitution	“Charitable institutions, churches…and all lands, buildings and improvements actually, directly and exclusively used for religious, charitable, or educational purposes shall be exempt from taxation.” — Establishes a broad policy of tax favor toward churches, mainly relevant to property and local taxes but often cited when construing national tax statutes.
Art. III, §5 & Art. II, §6 (Free exercise & separation of Church and State)	Support the legislature’s latitude to grant tax preference to donations that support religion without violating the non-establishment rule, so long as the preference is neutral and broadly available to similarly situated charitable donees.

3. Income-Tax Deductibility under the National Internal Revenue Code of 1997 (NIRC), as amended

Itemized-vs-Optional-Standard-Deduction (OSD) Only taxpayers who opt for itemized deductions may deduct charitable gifts. A taxpayer who chooses the OSD (40 % of gross sales/receipts for individuals, 40 % of gross income for corporations) forfeits the right to claim any charitable deduction for that year (NIRC §34[L]).

Statutory Authority – §34(H)

§34(H) Bucket	Who/What may be donated to	Limit to deductibility
(1) Government of the Philippines or any of its agencies, GOCCs, LGUs exclusively for priority public purposes (must appear in the General Appropriations Act or the “Priority Plan of the NEDA”).	No cap – 100 % deductible.	Must be evidenced by an official receipt; spending must go to a priority activity certified by NEDA.
(2)(a) Accredited “Non-Government Organizations” (NGOs) organized exclusively for religious, charitable, scientific, youth & sports development, cultural or social-welfare purposes and that are PCNC-accredited and issued a BIR Certificate of Donee Institution (CODI).	Full deductibility provided the donation is used directly for the purpose stated in the CODI within the year of receipt and no part inures to any private individual.	– Valid PCNC accreditation (3 years, renewable) – CODI valid until revoked/expired – Donee submits annual Summary Lists of Donations (eFPS).
(2)(b) Donations to non-accredited churches or religious societies that still qualify as “non-stock, non-profit” entities under §30(E).	Cap – 10 % of taxable income before the deduction for individuals; 5 % for corporations.	Proof of non-profit status (SEC registration; Articles & By-laws) and official receipt/certificate of donation.
(3) International organizations/institutions or qualified foreign charities to which the Phil. Government has treaty commitments (rare for purely church donations).	Full deductibility if treaty/conferral so provides.	Treaty or law must expressly allow.

Documentation (Revenue Regulations 13-98, RR 7-2020, RMO 20-2013) Donor must keep:
- Original Official Receipt (OR) issued by the church/donee.
- BIR Form 2322 – Certificate of Donation (COD for donor; COR for donee), issued within 30 days from receipt of donation.
- Board resolution of donee confirming acceptance and intended use (for large donations).
- If donor is a corporation: Board authorization allowing the gift.
Substantiation rule – Failure to present the OR and COD during audit disallows the deduction in toto.
Non-cash & in-kind donations Deduction equals fair-market-value (FMV) as appraised by an independent appraiser or zonal valuation for real property. If FMV exceeds P1 million, a formal sworn appraisal report is mandatory (RR 12-2001).

4. Donor’s-Tax Exemption (NIRC §101[A][3])

“Gifts in favor of… religious, charitable, or educational … corporations or institutions … no part of the net income of which inures to the benefit of any private individual” are exempt from donor’s tax, whether inter vivos or testamentary.

Key jurisprudence

Case	Gist
Lladoc v. CIR, G.R. L-18175 (16 June 1965)	A P10,000 pledge to a Catholic parish for church repair was ruled donor’s-tax-exempt, cementing that “religious-purpose” gifts fall under the statutory exemption.
Bishop of Nueva Segovia v. Provincial Board of Ilocos Sur (G.R. L-3705, 1927)	Earlier affirmed broad constitutional immunity for church properties used actually and exclusively for worship. Often cited by BIR when interpreting “exclusivity of use”.

No monetary cap applies for donor’s-tax exemption; the only operative test is whether the donee institution meets §101’s non-profit qualifications.

5. Estate-Tax Angle (NIRC §87[B])

Bequests or legacies to qualified religious or charitable institutions deduct from the gross estate of a decedent, again without monetary ceiling, provided the donee’s non-profit status is proven.

6. Accreditation & Compliance for Churches as Donees

PCNC Accreditation (for full-deductibility status) Even though churches are inherently “religious”, they must still undergo the PCNC evaluation if they want their donors to enjoy unlimited deductibility under §34(H)(2)(a).

Steps:
1. File PCNC application with Articles of Incorporation, SEC registration, financials (last 3 yrs), program reports.
2. Onsite visit & governance audit.
3. PCNC issues a recommendation to BIR.
4. BIR issues the CODI (valid 3 yrs; renewable).
Annual Reporting Within 15 days after the close of the taxable year, the church-donee must e-file the Summary List of Donations Received (SLDR) and, if accredited, attach utilization reports showing how each peso was spent within the year of donation.
Utilization Requirement – For fully deductible gifts, utilization must be within the same taxable year; otherwise, the excess unutilized portion becomes taxable income to the donee and may jeopardize CODI renewal (RR 13-98 §2[e]).
Revocation grounds – private inurement, political activity, late filing of SLDR, non-submission of audited FS, or diversion of funds to non-qualified activities. Revocation triggers retroactive denial of donors’ deductions.

7. VAT & Other Indirect Taxes

Pure donations are neither VAT-able nor subject to percentage tax, because there is no sale, barter, or exchange (NIRC §105). If, however, a “donation” conceals a quid-pro-quo (e.g., naming rights valued at FMV), the BIR may characterize the transaction partly as a sale subject to VAT on the portion representing consideration.

8. Documentary Stamp Tax (DST)

Inter vivos donations of real property to a church incur DST under Sec. 196 of the Tax Code (on deeds of donation), but gifts mortis causa are covered by estate-tax rules instead. Cash or movable-property donations are DST-exempt.

9. Anti-Money-Laundering/CTF Overlay

Churches are not “covered persons” under the AMLA, yet banks processing large cash gifts (≥ PHP 600,000 single transaction) must file Covered Transaction Reports. Donors claiming tax deduction for unusually large gifts should keep documentation justifying the economic ability to give, as such donations are BIR audit triggers.

10. Practical Computation Examples

Scenario	Individual taxpayer	Corporation
Taxable income (before donation)	PHP 1,200,000	PHP 3,000,000
Donation to non-accredited local parish	PHP 200,000	PHP 300,000
Deduction ceiling	10 % → PHP 120,000	5 % → PHP 150,000
Allowed deduction	PHP 120,000	PHP 150,000
Excess (non-deductible, but donor’s-tax-exempt)	PHP 80,000	PHP 150,000

If the same parish had CODI accreditation, the entire donation would be deductible because the ceiling is lifted.

11. Common Pitfalls Identified in BIR Audits

Using OSD yet still deducting donations.
Missing or unsigned BIR Form 2322.
Donee’s CODI expired on the date of gift.
Donation earmarked for a particular family or pastor (viewed as private inurement).
“Love offerings” to church personnel — BIR treats as taxable fringe benefit or compensation to the recipient, not a charitable gift.

12. Quick-Reference Checklist for Donors

Elect itemized deduction in your return.
Verify CODI validity of the church if deducting > 10 %/5 % cap.
Secure and file OR + BIR Form 2322.
For non-cash gifts, obtain appraisal.
Retain board resolutions, bank proof of transfer.
If publicly listed company, disclose under SRC rules.

13. Recent Legislative & Regulatory Developments (2021-2025)

Year	Issuance	Relevance
2021	CREATE Act (RA 11534)	Reduced corporate income-tax rate to 25 % (or 20 % for MSMEs) but did not change §§ 34(H) or 101.
2022	RR 5-2022	Tightened filing deadlines for SLDR; mandated eFPS submission even for churches without VAT registration.
2023	RMC 122-2023	Clarified that digital-wallet donations (GCash/PayMaya) qualify if the OR and COD are eventually issued.
2024	RMO 14-2024	Introduced risk-based audit selection focusing on large charitable deductions (≥ PHP 1 million).
2025	No new changes as of July 2025 impacting church-donation deductibility.

14. Conclusion

The Philippine tax system extends generous but conditional incentives to charitable gifts for religious purposes. Deductibility for income-tax purposes hinges on four pillars: (1) choosing itemized deductions; (2) respecting the 10 %/5 % caps unless the church holds a valid CODI; (3) strict documentary compliance; and (4) the donee’s continuing adherence to non-profit rules. Donor’s tax, by contrast, is broadly waived for bona-fide gifts to churches. Meticulous observance of the procedural rules – particularly PCNC accreditation, BIR Form 2322, and timely utilization reporting – is indispensable for preserving these tax benefits in the event of audit.

This guide is for general information only and is not a substitute for individualized legal or tax advice. Consult tax counsel or a CPA for transactions of substantial value or complexity.