Frequently Asked Questions

1. Who are required to file the Donor’s Tax Return?

Every person, whether natural or juridical, resident or non-resident, who transfers
or causes to transfer property by gift, whether in trust or otherwise, whether the gift
is direct or indirect and whether the property is real or personal, tangible or
intangible.

2. What donations are tax exempt?

A. In the Case of Gifts made by a Resident (Sec. 101 (A), NIRC as amended)


 Dowries or donations made on account of marriage before its celebration or
within one year thereafter, by parents to each of their legitimate, recognized
natural, or adopted children to the extent of the first P10,000
 Gifts made to or for the use of the National Government or any entity
created by any of its agencies which is not conducted for profit, or to any
political subdivision of the said Government
 Gifts in favor of an educational and/or charitable, religious, cultural or
social welfare corporation, institution, accredited non-government
organization, trust or philantrophic organization or research institution or
organization, provided not more than 30% of said gifts will be used by such
donee for administration purposes

B. In the Case of Gifts Made by a Nonresident not a Citizen of the Philippines (Sec.
101 (B), NIRC as amended)


 Gifts made to or for the use of the National Government or any entity
created by any of its agencies which is not conducted for profit, or to any
political subdivision of the said Government
 Gifts in favor of an educational and/or charitable, religious, cultural or
social welfare corporation, institution, accredited non-government
organization, trust or philantrophic organization or research institution or
organization, provided not more than 30% of said gifts will be used by such
donee for administration purposes

C. Tax Credit for Donor's Taxes Paid to a Foreign Country (Sec. 101 (C), NIRC as
amended)


 In General. - The tax imposed by this Title upon a donor who was a citizen
or a resident at the time of donation shall be credited with the amount of any
donor's tax of any character and description imposed by the authority of a
foreign country.
 Limitations on Credit. - The amount of the credit taken under this Section
shall be subject to each of the following limitations:

- The amount of the credit in respect to the tax paid to any country shall not exceed
the same proportion of the tax against which such credit is taken, which the net
gifts situated within such country taxable under this Title bears to his entire net
gifts; and
- The total amount of the credit shall not exceed the same proportion of the tax

2-2003) 5. (Sec. are donations between businesses considered donations made between strangers? Donation made between business organizations and those made between an individual and a business organization shall be considered as donation made to a stranger. (sec. No.A. the BIR can impose donor’s tax on contributions of this nature. 10. and therefore. 11. Accordingly. For purposes of Donor’s Tax. 2-2003) 7. (sec. duly reported to the Commission shall not be subject to the payment of any gift tax (donor’s tax). 7166 specifically states that any provision of law to the contrary notwithstanding any contribution in cash or kind to any candidate or political party or coalition of parties for campaign purposes. provides that any contribution in cash or in kind for campaign purposes shall be governed by R. RR No. the taxable base is the fair market value that appears in the tax declaration at the time of the gift 4. (sec. Section 13 of the R. any contribution in cash or in kind to any candidate or political party or coalition of parties for campaign purposes shall not be subject to the payment of any gift tax. 2-2003) 8. Are gratuitous donations to Homeowners’ Associations subject to Donor’s Tax? . (Q-14. What instance will it be subject to Donor’s Tax? Those contributions in cash or in kind NOT duly reported to the Commission on Elections (COMELEC) shall not be subject to donor’s tax. No. 3. “NET GIFT” shall mean the net economic benefit from the transfer that accrues to the donee. is a legally adopted child considered stranger? A legally adopted child is entitled to all the rights and obligations provided by law to legitimate children. In case of real property.A. Accordingly. 10. what does the term “Net Gift” mean? For purposes of the donor’s tax. RR No. RR No. Section 99 (C) of the Tax Code. 7166 or the Election Code. whichever is higher. donation to him shall not be considered as donation made to stranger. NIRC as amended) If there is no zonal value. 7166. 63-2009) 6. For purposes of Donor’s Tax. For purposes of Donor’s Tax. RMC No. No. What are the bases in the valuation of property? If the gift is made in property. but imposing upon the donee the obligation to pay the mortgage liability. Under R.against which such credit is taken. then the net gift is measured by deducting from the fair market value of the property the amount of mortgage assumed. as amended. the fair market value at that time will be considered the amount of gift. the taxable base is the fair market value as determined by the Commissioner of Internal Revenue (Zonal Value) or fair market value as shown in the latest schedule of values fixed by the provincial and city assessor (MV per Tax Declaration). 88 and 102. if a mortgaged property is transferred as a gift. which the donor's net gifts situated outside the Philippines taxable under this title bears to his entire net gifts.A.

10066)  Philippine Normal University (Sec. Associations are subject to the corresponding internal revenue taxes imposed under the Tax Code of 1997 on their income of whatever kind and character. R.Gifts. use of properties or delivery of an object. No. In this regard. 10174)  Aurora Pacific Economic Zone and Freeport Authority (Sec. then the amount by which the fair market value of the property exceeded the value of the consideration shall. 3062)  International Rice Research Institute (Art. services and use of properties constitute as other assessments/charges from activity in exchange for the performance of a service. (Sec. No. 10618)  People’s Television Network. 292) . NIRC. 4. R. R. PD 1620)  Task Force on Human Settlements (Sec. No. and other contributions received by the Homeowners’ Associations (Associations) are subject to the payment of donor’s tax pursuant to Section 98 and 99 of the Tax Code.A.D. R. 3850)  Ramon Magsaysay Award Foundation (Sec. 10083)  Girl Scouts of the Philippines (Sec. services or use or lease of properties to Homeowners’ Association subject to Donor’s Tax? Pursuant to RMC No. (III. R. Incorporated (Sec. 9-2013. 9. As such. 2. E.A. 25. No. for the purpose of Donor’s Tax. RMC No.A. No. 9.A. R. 7. other than real property referred to in Section 24 (D) of the NIRC. 53-2013) 10. 10390)  People’s Survival Fund (Sec. No. R. 10073)  Philippine Red Cross (Sec.O. (II. What is the proper treatment for transactions involving transfer of property other than real property referred to in Section 24 (D) for less than adequate and full consideration? Where property. 13. Endowment or gifts received by such associations are not exempt from donor’s tax considering that gifts to Associations are not qualified for exemption under Section 101(A)(3) of the Tax Code. 3(b)(8).A. R. No. donations. these fees are income on the part of the associations that are subject to income tax under Section 27 of the Tax Code. 10067)  National Commission for Culture and the Arts (Sec. 15. P. No.A. 100. 14. as amended.A. 9500)  National Water Quality Management Fund (Sec. What entities are considered exempted from Donor’s Tax under special laws? The list below consists of entities considered Donor’s Tax exempt under special laws including. 7. contributions to associations in exchange for goods. RMC No.A. as amended. 5(2). and shall be included in computing the amount of gifts made during the calendar year.D. 35.A.A. P. 17. No. 3676)  Philippine-American Cultural Foundation (Sec. R. 419)  National Social Action Council (Sec. P. 5.D. Is an onerous donation or donation in exchange for goods. 9647)  University of the Philippines (Sec.A. as amended. 53-2013) 9. 2. R. No. R. 9275)  Philippine Investors Commission (Sec. 4. but not limited to the following:   Rural Farm School (Sec. No.A.A. 11. R. R. No. be deemed a gift. 10072)  Tubbataha Reefs Natural Park (Sec. as amended) 11. 294)  Aquaculture Department of the Southeast Asian Fisheries Development Center (Sec. is transferred for less than adequate and full consideration in money or money’s worth.

PD 205)  Integrated Bar of the Philippines (Sec. The net of adjusted asset minus the adjusted liability value is the indicated value of the equity.  Development Academy of the Philippines (Sec. 3. (RR NO. For purposes of this item. 12. PD 181) 12. or (b) The fair market value as shown in the schedule of values fixed by the Provincial and City Assessors. the appraised value of real property at the time of sale shall be the highest among the following: (a) The fair market value as determined by the Commissioner. the Adjusted Net Asset Method shall be used whereby all assets and liabilities are adjusted to fair market values. 6-2013) (Annex U) . or (c) The fair market value as determined by Independent Appraiser. How do we determine the fair market value of the unlisted stocks? In determining the value of the shares.