Donor’s Tax

- It is an excise tax imposed on the privilege of transfer of property by way of a gift inter-vivos
based on pure act of liberality without any or less that adequate consideration.

Characteristics of donor’s tax

- It is an excise tax, meaning the tax is imposed on the privilege to transfer a property gratuitously
inter-vivos.
- It is an Ad Valorem Tax, meaning the tax imposed is based on the fair market value of the
property at the time the donation was made.
- It is a direct tax, it is imposed upon the donor, and it cannot be transferred to another such
burden to pay for it.
- National Tax – Sec. 133 of Local Government Code, one of the common limitations of LGU’s
taxing power, it is found in NIRC.
- General Revenue because donor’s tax purpose is to raise revenue.
- Progressive, as the tax increases, tax rate increases.

When the done is a stranger, tax imposed shall be thirty percent (30%) of the net gifts.

Rationale: The increased rate of 30% in effect discourages donations to stranger and encourages
donations to family member.

Who is a stranger?

- For donor’s tax, a stranger is a person not a:

a. Brother, sister, spouse, ancestor, and linear descendant.
b. Relative by consanguinity within fourth civil degree
c. Donation made between business organizations.
d. Those made between an individual and a business organization.

A legally adopted child is entitled to all the rights and obligations provided by law, hence, donation
made to him shall not be classified as donation to a stranger.

The right or privilege to transfer donation is subject to donor’s tax, and the right to receive donation
that is subject to tax cannot be subject to income tax because is one of the exclusions from gross
income.

Perfection of donation inter-vivos

- It is perfected upon the knowledge of the donor of the acceptance of the donee.
Requisites for a valid donation.

a. Donative intent of the donor

b. Capacity of the donor
c. Delivery of the donated property
d. Acceptance of the donee
e. Donation must in proper form.
i. If movable- orally or in writing if the value is equal to or less than 5k. Otherwise, it shall
be in writing.
ii. Immovable- must be made in a public document.

In Acceptance (Sec. 12, RR-12-2018)

- For movables exceeding 5k – It shall be made in writing in accordance with Civil Code. (Art. 748)