BUSINESS AND TRANSFER TAXATION

Introduction to Transfer Taxation (Students’ Handouts)

TRANSFER TAXATION

Transfers refer to any transmission of property from one person to another.

Types of Transfers
1. Bilateral transfers
2. Unilateral transfers
3. Complex transfers

Types of Transfer Taxes

1. Donor’s Tax
2. Estate Tax

Rationale of Transfer Taxation

1. Tax evasion or minimization theory
2. Tax recoupment theory
3. Benefit received theory
4. State partnership theory
5. Wealth redistribution theory
6. Ability to pay theory

Nature of Transfer Taxes

1. Privilege tax
2. Ad valorem tax
3. Proportional tax
4. National tax
5. Direct tax
6. Fiscal tax

Classification of Transfer Taxpayers

1. Residents or citizens
2. Non-resident aliens

General Rules in Transfer Taxation

1. Residents or citizens are subject to tax on all transfers of properties regardless of their
location.
2. Non-resident aliens are taxable only on properties transferred which are located in the
Philippines at the date of transfer.

Example of Intangible Properties

1. Financial assets
a. Cash
b. Receivables
c. Investment in bonds
d. Shares of stock in a corporation
e. Interest in a partnership
2. Accounting intangible assets

Timing of Valuation of Transfers

1. Donation inter-vivos – date of completion or perfection of donation
2. Donation mortis-causa – date of death

Non-Taxable Transfers
1. Void transfers
2. Quasi-transfers
3. Incomplete transfers
a. Conditional transfers
b. Revocable transfers
c. Transfer in contemplation of death
d. Transfers with reservation of title to property until death

Complex Incomplete Transfers

1. Donation inter-vivos – fair value at the date of completion of transfer less the consideration
given
2. Donation mortis causa – fair value at the date of death less consideration given at the date of
transfer

Based on R.B.Banggawan’s Business and Transfer Taxation (2019) Page 1 of 1