DONOR’S TAX

1. What is a donation?

Donation is an act of liberality whereby a person disposes gratuitously a thing or a right in favor
of another, who accepts it.

2. What is donor’s tax?

A tax on a privilege of transmitting one’s property or property rights to another or others

without adequate and full valuable consideration. A tax impose on gratuitous transfer
intervivos.

3. What are the requisites of donation?

A. Capacity of the donor

B. Donative Intent (Animo Dodandi)
C. Delivery, whether actual or constructive, of the subject gift
D. Acceptance

4. What law governs the imposition of donor’s tax?

The law in force at the time of the perfection/completion of the donation shall govern the
imposition of the donor’s tax.

5. What are the examples of void donations?

a. Those made between person who are guilty of adultery or concubinage at the time of
donation.
b. Those made between persons found guilty of the same criminal offense in consideration
thereof.
c. Those made to a public officer or his wife, descendants and ascendants, by reason of his
office.
d. Those made to incapacitated persons shall be void, though simulated under the guise of
another contract or through a person who is interposed.
e. Every donation between husband and wife during the marriage shall be void.

6. How do we compute donor’s tax?

On the first donation of a year

Gross Gifts xxx

Less: Deductions from gross gifts xxx
Net Gifts xxx
Multiply Tax Rate xxx
Donor’s Tax on the Net Gifts xxx

On donation of a subsequent date during the year

 Gross gifts made on this date xxx
Less: Deductions from gross gifts xxx
Net Gifts xxx
Add: All prior net gifts within the year xxx
Aggregate Net Gifts xxx
Multiply: Tax Rate xxx
Donor’s tax on aggregate net gifts xxx
Less: Donor’s tax on all prior net gifts xxx
Donor’s tax on the net gifts on this date xxx

7. What compose the gross gift?

Resident or Citizen Donor Non-Resident Alien Donor

ALL real property wherever situated
ALL personal property wherever
situated
(Tangible and Intangible)
ONLY real property situated in the
Philippines
ONLY personal property
a. Tangible property situated in the
Phils.
b. Intangible property with a situs in
the Phils unless exempted on the
basis of reciprocity

8. What are the allowable deductions from gross gift?

A. Gifts made by a resident or citizen

a. Dowries or gifts made on account of marriage and before its celebration or within one
year thereafter by parents to each of their legitimate, illegitimate or legally adopted
children to the extent of the first P10,000.
b. 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.
c. Gifts in favor of educational, charitable, religious, cultural or social welfare corporation,
institutions, foundations, trust or philanthropic organization, research institution or
organization (NGO). Provided, that no more than 30% of said gifts shall be used by such
done for administration purposes
d. Encumbrances on the property
e. Diminution in the value of property

B. Gifts made by a non-resident alien

a. Same as (b)
b. Same as (3) except accredited non-government organization (NGO)
c. Same as (4)
d. Same as (5)

9. What are donations exempt by special laws?

 Donations to the following special non-stock, non-profit institutions duly recognized by the
government pursuant to a special law are exempt:

a. International Rice Research Institute

b. Ramon Magsaysay Award Foundation
c. Southern Philippines Development Administration
d. Philippines American Cultural Foundation
e. Integrated Bar of the Philippines
f. Development Academy of the Philippines
g. National Social Action Council
h. Museum of Philippine Costumes
i. Agua-culture Department of South East Asia Fisheries Development Center of the
Philippines
j. Intramuros Administration

10. What are the different donor’s tax rate?

If the done is a stranger, the tax rate shall be 30% of the net gifts.

If the done is not a stranger, the tax rate shall be from 2% to 15% of the net gifts.

Stranger is a person who is not a brother, sister, spouse, ancestor and lineal descendant, or of a
relative by consanguinity in the collateral within the 4 th civil degree.

A legally adopted child is entitled to all rights and obligations provided by law to legitimate
children, and therefore, donation to him shall not be considered as donation made to stranger

Donation made between business organizations and those made between an individual and a
business organization shall be considered as donation made to a stranger. Any contribution in
cash or in kind to any candidate, political party or coalition of parties for campaign purposes
shall be governed by Election Code, as amended.

11. Are the rules for foreign tax credit applies to donor’s tax?

Yes, the rules in estate tax credit are the same, provided, the following are met:

a. Donor was a filipino citizen or resident alien

 b. At time of foreign donation
c. Donor’s taxes of any character and description
d. Are imposed and paid by the authority of a foreign country

12. When to file the donor tax return?

The donor tax return is filed and the donor tax due is paid within thirty days after the date the
gift is made.

The return shall be under oath in duplicate setting forth:

a. Each gift made during the calendar year which is to be included in computing the net gifts;
b. The deductions claimed and allowable;
c. Any previous net gifts made during the same taxable year;
d. The name of the done;
e. Relationship of the donor to the donee; and
f. Such further information as may be required by rules and regulations made pursuant to law.

13. Where to file the donor tax return?

A. Resident
With an authorized agent bank, the Revenue District Officer, Revenue Collection Officer or
duly authorized Treasurer of the city of municipality where the donor was domiciled at the
time of transfer, or if there be no legal residence in the Philipines, with the office of the
Commissioner

B. Non-Resident
Filed with the Philippine Embassy or Consulate in the country where he is domiciled at the
time of the transfer, or directly with the office of the Commissioner.