Donor's Tax

Donor's Tax is an excise tax imposed on the privilege of transferring property by way of a gift
inter vivos based on pure act of liberality without any or less than adequate consideration
and without any legal compulsion to give.
The tax is imposed upon the donor.

Purpose of Donor's Tax

1. To complement the estate tax by preventing the tax free depletion of donor's estate
during his lifetime.
2. To raise revenue in order to support the government by funding the cost of its operations.

Imposition of Donor's Tax

- Donor's tax shall be levied, assessed, collected and paid upon the transfer by any person,
resident or nonresident, of the property by gift.
- The tax shall apply whether the transfer is in trust or otherwise, whether the gift is direct or
indirect, and whether the property is real or personal, tangible or intangible.

Transfer in Trust or Otherwise

It includes not only the transfer of ownership in the fullest sense but also the transfer of any
right or interest in property, but less than the title. The designation of a donation in trust may
either be:
- Revocable not subject to donor's tax
- Irrevocable subject to donor's tax (complete gift)
Trust - nilipat yung property sa isang tao para sa benefit ng isang tao.
example:
Binigay mo kay A for the benefit of B. (di pa pwede idirect kay B kasi minor pa)
(pag nasa legal age na si B tsaka matatransfer sa kanya fully)

Subject to Donor's Tax

example: Donor's
Tax
Mr. F donated a brand new car to his eldest son on account of his 21st birthday.
Yes
The eldest son accepted the birthday gift.
Mr. J created a trust of P5 million designating his eldest son as the beneficiary
Yes
of the irrevocable trust on accout of his son's 21st birthday.
Mr. L donated his five-hectare sugarcane farmland valued at P2,500,000 to his No (estate
son. The donation will take effect upon his death. tax)
Content of Donor's Tax Return
- Each gift made during the calendar year is to be included in computing net gifts;
- The deductions claimed and allowable;
- Any previous net gifts made during the same calendar year;
- The name of the donee; and
- Such further information as may be required by rules and regulations made pursuant to law

Time and Place of Filling and Payment

- Donor's Tax Return shall be filed within (30) days after the date gift is made and the tax due
thereon shall be paid at the time of filing (pay as you file).
- Payment must be made when the gift is complete

Who shall File

The Donor's Tax Return (BIR Form No. 1800) shall be filed in triplicate by any person, 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 intagible.

Where to File
Tax Return shall be filed with any
- Authorized Agent Bank (AAB) of the Revenue District Office having jursdiction over the
place of domicile of the donor at the time of the donation, or
- If there is no legal residence in the Philippines, with the Office of the Commissioner of
Internal Revenue, (Revenue District Office No. 39, South Quezon City).
- In case of gifts made by a non-resident alien, the return may be filed withing RDO No. 39, or
with the Philippine Embassy or Consulate in the country where he is domiciled at the time of
donation.

Office of the Commissioner

This shall refer to the Revenue District Office (RDO) having jurisdiction over the BIR-National
Office Building which houses the Office of the Commissioner, or presently, to the Revenue
District Office No. 39-South Quezon City.

Multiple Gifts
- A separate return shal be filed by each donor for each gift (donation) made on different
dates during the year reflecting therein any previous net gifts made in the same calendar

year.
- Only one return shall be filed for severall gifts (donations) by a donor to the different
donees on the same date.

Multiple Donors
- If the gift (donation) involves conjugal/community property, each spouse shall file separate
return corresponding to his/her respective share in the conjugal/community property
donated. This rule shall likewise apply in the case of co-ownership over the property being
donated.

- If only one spouse signed the deed of donation, there is only one donor for donor's tax
purposes, without prejudice to the right of the other spouse to question the validity of the
donation.
Applicabe Law
The law in force at the time of the completion of the donation shall govern the imposition of
the donor's tax.
Date of Donation Applicable Law
Before January 1, 1988; R.A. No. 7499
January 1, 1998-December 31, 2017 R.A. No. 8424
January 1, 2018 R.A. 10963 (TRAIN)
Only donations made on or after January 1, 2018 shall be sbject to the donor's tax rate
provided under the TRAIN Law

Amendment by TRAIN LAW

Topic Old
Tax Rates 2% to 15% with first P100,000 net gift
exempted if the donee is a relative
30% flate rate if donee is a stranger
Stranger A stranger is a person who is not a:
TRAIN
6% rate computed on the basis of net
gift in excess of P250,000 exempt gift
made during the Calendar year whether
donee is relative or a stranger.
No Longer Relevant

- brother, sister (whether by whole or

half-blood), spouse, ancestor and lineal
descendants; or
- relative by consanguity in the collateral
line within the fourth degree of
relationship
Transfer No Provision A sale, exachange, or other transfer of
for Less property made in the ordinary course of
than business (a transaction which is a bona
adequate fide, at arm's length transactions and
and Full free from donative intent), will be
Consider- considered as made an adequate and
ation full consideration in money or money's
worth.
Dowries Dowries or gift on account of marriage No longer allowed
or gift onand befor celebration or marriage or
account within one year thereafter by parents
of to eaach of their legitimate, recognized
marriage natural or adopted children to the extent
of first P10,000
Computation of Tax
Computation of Net Gift Subject to Tax

Net Gift
This shall mean the net economic benefit from the transfer that accrues to the donee.
= gross gift - allowable deductions
(for the first donation in the calendar year)
Gross Gift
Gross Gift is the value of the propety or right donated subject to donor's tax before any
deduction.
- Actual Gifts direct gifts
- Transactions deemed gifts tinatago (donated through sale) SEC. 100

Allowed Deductions
Allowed Deductions are those amount specified by law/BIR to be deductible from the Gross
Gift to arrive at taxable net gift that is subject to computation of donor's tax. The deductions
include
- encumbrance of the gift,
- diminution on the gift as directed by the donor and
- those exempt gift as specified by NIRC and other special laws
(binabawas before 250,000)

Cumulative Basis
The computation of the donor's tax is on a cumulative basis over a period of one calendar
year. Cumulative only insofar as gifts made within the same calendarr year.
= gross gift - allowable deductions + prior net gifts
(subsequent donations withing the SAME calendar year

Basis of Donor's Tax

1. If there is only one gift given during the calendar year, the tax due shall be based on the
value of the gift donated less allowable deductions.
2. If there are several gifts made, the tax due shall be computed based on the total net gifts
made during the calendar year.

Tax Rate
The donor's tax for each calendar year shall be six percent (6%) computed on the basis of the
total gifts in excess of Two Hundred Fifty Thousan Pesos (P250,000) exempt gift made during
the calendar year.
Net Gift Donor's Tax
Up to P250,000 Exempt
Excess above P250,000 6%
Donor's Tax Due
example: Donations were made on the following dates:

Dates Donation
January 30, 2022 2,000,000
March 30, 2022 1,000,000
August 15, 2022 500,000

January 30, 2022 Donation 2,000,000

Less: Exempt Gift under NIRC (250,000)
Net Gift Subject to Tax 1,750,000
Multiply: Tax Rate 6%
Donor's Tax Due 105,000

March 30, 2022 Donation 1,000,000

Add: Prior Gift (January 30, 2022 donation) 2,000,000
Less: Exempt Gift (250,000)
Net Gift Subject to Tax 2,750,000
Multiply: Tax Rate 6%
Donor's Tax Due 165,000
Prior Payments 105,000
Donor's Tax Payable (Still Due) 60,000

August 15, 2022 Donation 500,000

Add: Prior Gift (January & March, 2022 donation) 3,000,000
Less: Exempt Gift (250,000)
Net Gift Subject to tax 3,250,000
Multiply: Tax Rate 6%
Donor's Tax Due 195,000
Prior Payments 165,000
Donor's Tax Payable (Still Due) 30,000
Note: - Sa Tax, mag kaiba ang Donor's Tax Due sa Donor Tax Payable
- If mahaba yung problem (maraming donation) and ang tinatanong ay payable sa
last donation just compute for the recent donor's tax due (2nd to the
last) that would represent the prior payments

Situs of Donor's Tax

Donor
Resident citizen, Non-resident
citizen, Resident Alien
Non-resident Alien
Property that may be subject to Philippine Donor's Tax
All property, real or personal, tangible or intangible,
wherever situated.
General rule - only those properties located in the Philippines
may be subject to donot's tax.

Exception - if reciprocity rule applies, no donor's tax shall

be collected in respect of intangible personal property
located in the Philippines; in which case, only the following
properties shall be subject to donor's tax
- Real property in the Philippines; and
- Tangible personal preoperty in the Philippines
 Real and Tangible Intangible
Personal Property Personal Property
Within Without Within Without
Resident Citizen Donor ✓ ✓ ✓ ✓
Resident Alien Donor ✓ ✓ ✓ ✓
Non-resident Citizen Donor ✓ ✓ ✓ ✓
NRAD w/o reciprocity ✓ ✘ ✓ ✘
NRAD w/ reciprocity ✓ ✘ ✘ ✘
Domestic Corporation ✓ ✓ ✓ ✓
Foreign Corporation ✓ ✘ ✓ ✘

Non-Resident Citizen Donor

Asta donated the following properties:

Property Amount Allowed Deduction

April 9
Property Gift in Ph 650,000 154,000
Property Gift in Abroad 300,000 45,000

July 25
Property Gift in Ph 100,000 30,000
Property Gift in Abroad 100,000 40,000

Amount Donor's Tax

April 9 Gift - Ph + Abroad (650,000 + 300,000) 950,000
Allowed Deduction - Ph + Abroad (154,000 + 54,000) (199,000)
Less: Exempt Gift (250,000)
Tax Base 501,000 x 6% 30,060

July 25 Gift - Ph + Abroad (100,000 + 100,000) 200,000

Allowed Deduction - Ph + Abroad (30,000 + 40,000) (70,000)
Previous Gift (950,000 - 199,000) 751,000
Less: Exempt Gift (250,000)
Tax Base 631,000 x 6% = 37,860
Donor's Tax Payable (37,860 - 30,060) 7,800

Non-Resident Alien Donor

Amount Donor's Tax

April 9 Gift - Ph 650,000
Allowed Deduction - Ph (154,000)
Less: Exempt Gift (250,000)
Tax Base 246,000 x 65 14,760

July 25 Gift - Ph 100,000

Allowed Deduction (30,000)
Previous Gift (650,000 - 154,000) 496,000
Less: Exempt Gift (250,000)
Tax Base 316,000 x 6% = 18,960
Donor's Tax Payable (18,960 - 14,760) 4,200
Effect of Situs to Donor's Tax
Non-Resident Citizend Donor Non-Resident Alien Donor
First Donation 30,060 14,760
Second Doncation 7,800 4,200

Splitting of Gifts
A tax minimization scheme which is done by spreading the gift over numerous calendar
years to avail of lower tax liability.
This is done by making two or more donations during different calendar years. The donor is
not required to include all donations in the last return.

example: Mag dodonate ng 500,000, instead of donating it as a whole

First 250,000 will be donated on December 2021
Then the rest will be donated on January 1, 2022
To avoid paying tax
Spouses A and B wish to donate P1,000,000 to their one and only child. When
should the couple make the donations?

Date of Donation Donor Amount Donor's Tax Due

December 31, 2021 Husband 250,000 Exempt *Communal Property
December 31, 2021 Wife 250,000 Exempt meaning hati sila

January 1, 2022 Husband 250,000 Exempt

January 1, 2022 Wife 250,000 Exempt
1,000,000 -> Tax avoidance
Donation Made by Spouses
Conjugal Donation of Husband and Wife cannot transfer by virtue of sale of donation of any
conjugalor communal property WITHOUT CONSENT from the other, unless it is a moderate
donation for charity or on occasion of family rejoicing.
Donations made between husband and wife during marriage are void, except moderate
donation for charity or occasion of family rejoicing.
Conjugal/Communal Property
Conjugal Partnership of Gains - Kinasal pero may pren-up (kanya kanya ang properties)
Absolute Community of Property - Property ni husband property rin ni wife vice-versa
Conjugal Partnership of Absolute Community of
Gains (CPG) Property (ACP)
Property acquired during marriage by
Conjugal Communal
onerous title through common fund
Property obtained from labor, industry,
work, or profession of either or both Conjugal Communal
spouses
Fruits, natural, industrial, or civil
received during the marriage from Conjugal Communal
common property
Property acquired during marriage by
Exclusive Exclusive
gratuitous title (inheritance or donation)
Property brought to the marriage as his
Exclusive Communal
or her own
Fruits from the exclusive property Conjugal Exclusive
Donation Made by Spouses

Mr. and Mrs. Galla, spouses and citizens of the Philippines, donated to their legitimate
daughter the following properties in 2022:

- Vacation House (Conjugal property - Hong Kong) 1,500,000

- Car (Conjugal property - Ph) 750,000
- Jewelry (Exclusive property of Mrs. Galla) 475,000
- Assuming no allowed deduction

Mr. Galla Mrs. Galla

Vacation House (1,500,000/2) 750,000 750,000
Car (750,000/2) 375,000 375,000
Jewelry 475,000
Total Net Gift 1,125,000 1,600,000
Less: Exempt Gift (250,000) (250,000)
Net Gift Subject to Tax 875,000 1,350,000
Multiply: Tax Rate 6% 6%
Donor's Tax Due 52,500 81,000

Donation to Political Party

Sec. 28 (B) of RA No. 10963 (TRAIN Law) states that any contribution in cash or in kind to any
candidate, political party or coalition of parties for campaign purposes shall be governed by
the Election Code, as amended.

*After ng election pag may sobra kailangan ibalik, pag hindi binalik babayaran ng donee ng
tax

Sec. 13. Republic Act No. 7166

Any provision of law to the contrary notwithstanding any contribution in cash or in kind to
any candiate or political party or coalition of parties for campaign purposes, duly reported to
the Commission shall not be subject to the paymen of any gift tax.

*dapat in writing, pag hindi in writing income tax will be applied