Index for Donor's Tax:


Description

Donor’s Tax is a tax on a donation or gift, and is imposed on the gratuitous transfer of property between two or more persons who are living at the time of the transfer. It 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.

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Tax Form

BIR Form 1800 – Donor’s Tax Return

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Documentary Requirements

The following requirements must be submitted upon field or office audit of the tax case before the Tax Clearance Certificate/Certificate Authorizing Registration can be released:

1. Deed of Donation

2. Sworn Statement of the relationship of the donor to the donee

3. Proof of tax credit, if applicable

4. Certified true copy(ies) of the Original/Transfer/Condominium Certificate of Title (front and back) of lot and/or improvement donated, if applicable

5. Certified true copy(ies) of the latest Tax Declaration (front and back pages) of lot and/or improvement, if applicable

6. “Certificate of No Improvement” issued by the Assessor’s office where the properties have no declared improvement, if applicable

7. Proof of valuation of shares of stocks at the time of donation, if applicable

    • For listed stocks - newspaper clippings or certification issued by the Stock Exchange as to the par value per share
    • For unlisted stocks - Audited Financial Statements duly certified by an independent certified public accountant with computation of fair market value per share at the time of donation.

8. Proof of valuation of other types of personal properties, if applicable

9. Proof of claimed deductions, if applicable

10. Copy of Tax Debit Memo used as payment, if applicable

Additional requirements may be requested for presentation during audit of the tax case depending upon existing audit procedures.

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Tax Rates

Effective January 1, 1998 to present (Republic Act No. 8424)

Net Gift Over
But not Over
The Tax Shall be
Plus
Of the Excess Over
 
100,000.00
exempt
 
 
100,000.00
200,000.00
0
2%
100,000.00
200,000.00
500,000.00
P 2,000.00
4%
200,000.00
500,000.00
1,000,000.00
14,000.00
6%
500,000.00
1,000,000.00
3,000,000.00
44,000.00
8%
1,000,000.00
3,000,000.00
5,000,000.00
204,000.00
10%
3,000,000.00
5,000,000.00
10,000,000.00
404,000.00
12%
5,000,000.00
10,000,000.00
and over
1,004,000.00
15%
10,000,000.00

Notes:

1. Rate applicable shall be based on the law prevailing at the time of donation.

2. When the gifts are made during the same calendar year but on different dates, the donor's tax shall be computed based on the total net gifts during the year.

Donation made to a stranger is subject to 30% of the net gift. A stranger is a person who is not a:

    • brother, sister (whether by whole or half blood), spouse, ancestor and lineal descendants; or
    • relative by consanguinity in the collateral line within the fourth degree of relationship.

 

Effective July 28, 1992 to December 31, 1997 (Republic Act No. 7499)

Net Gift Over
But not Over
The Tax Shall be
Plus
Of the Excess Over
 
50,000.00
exempt
 
 
50,000.00
100,000.00
1.5%
 
50,000.00
100,000.00
200,000.00
P 750.00
3%
100,000.00
200,000.00
500,000.00
3,750.00
5%
200,000.00
500,000.00
1,000,000.00
18,750.00
8%
500,000.00
1,000,000.00
3,000,000.00
58,750.00
10%
1,000,000.00
3,000,000.00
5,000,000.00
258,750.00
15%
3,000,000.00
5,000,000.00
and over
558,750.00
20%
5,000,000.00

Donation made to a stranger is subject to 10% of the net gift. A stranger is a person who is not a:

    • brother, sister (whether by whole or half blood), spouse, ancestor and lineal descendants; or
    • relative by consanguinity in the collateral line within the fourth degree of relationship.

 

Effective January 16, 1981 to July 27, 1992 (Presidential Decree No. 1773)

Net Gift Over
But not Over
The Tax Shall be
Plus
Of the Excess Over
 
1,000.00
exempt
 
 
1,000.00
50,000.00
1.5%
 
1,000.00
50,000.00
75,000.00
P 735.00
2.5%
50,000.00
75,000.00
100,000.00
1,360.00
3%
75,000.00
100,000.00
150,000.00
2,110.00
6%
100,000.00
150,000.00
200,000.00
5,110.00
9%
150,000.00
200,000.00
300,000.00
9,610.00
12%
200,000.00
300,000.00
400,000.00
21,610.00
15%
300,000.00
400,000.00
500,000.00
36,610.00
18%
400,000.00
500,000.00
625,000.00
54,610.00
21%
500,000.00
625,000.00
750,000.00
80,860.00
24%
625,000.00
750,000.00
875,000.00
110,860.00
28%
750,000.00
875,000.00
1,000,000.00
145,860.00
32%
875,000.00
1,000,000.00
2,000,000.00
185,860.00
36%
1,000,000.00
2,000,000.00
3,000,000.00 
545,860.00 
38% 
 2,000,000.00
3,000,000.00
 
925,860.00 
40% 
3,000,000.00 

Donation made to a stranger shall be either the amount computed in accordance with the preceding schedule or twenty percent (20%) of the net gifts, whichever is higher. A stranger is a person who is not a:

    • brother, sister (whether by whole or half blood), spouse, ancestor and lineal descendant; or
    • relative by consanguinity in the collateral line within the fourth degree of relationship.

 

Please note that the donor’s tax rates will vary depending on the law applicable at the time of the gift. The pertinent laws are as follow:

    • Commonwealth Act. No. 466 – effective July 1, 1939 to September 14, 1950
    • Republic Act No. 579 – effective September 15, 1950 to August 3, 1969
    • Republic Act No. 6110 – effective August 4, 1969 to December 31, 1972
    • Presidential Decree No. 69 – effective January 1, 1973 to January 15, 1981
    • Presidential Decree No. 1773 – effective January 16, 1981 to July 27, 1992
    • Republic Act No. 7499 – effective July 28, 1992 to December 31, 1997
    • Republic Act No. 8424 – effective January 1, 1998 to present 

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Procedures

File the return in triplicate (two copies for the BIR and one copy for the taxpayer) with any Authorized Agent Bank (AAB) of the RDO having jurisdiction over the place of the domicile of the donor at the time of the transfer. In places where there are no AAB, the return will be filed directly with the Revenue Collection Officer or duly Authorized City or Municipal Treasurer where the donor was domiciled at the time of the transfer, or if there is no legal residence in the Philippines, with Revenue District No. 39 - South Quezon City.

In the case of gifts made by a non-resident alien, the return may be filed with Revenue District No. 39 - South Quezon City, or with the Philippine Embassy or Consulate in the country where donor is domiciled at the time of the transfer.

Submit all documentary requirements and proof of payment to the Revenue District Office having jurisdiction over the place of residence of the donor.

One-Time Transaction (ONETT) taxpayers shall mandatorily use the eBIRForms in filing all of their tax returns. They may opt to submit their tax returns manually using the eBIRForms Offline Package in the RDO having jurisdiction over the place of the domicile of the donor at the time of the transfer or electronically through the use of the Online eBIRForms System.  (Sec. 3(2) RR No. 6-2014)

Please note that the time of filing and payment will vary depending on the law applicable at the time of gift.

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Deadlines

Within thirty days (30) after the date the gift (donation) is made. A separate return will be filed for each gift (donation) made on the different dates during the year reflecting therein any previous net gifts made during the same calendar year.

If the gift (donation) involves conjugal/community/property, each spouse will file separate returns corresponding to his/ her respective share in the conjugal/community property. This rule will also apply in the case of co-ownership over the property.

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Related Revenue Issuances

Revenue Regulations Nos. 2-20036-2013, 6-2014

Revenue Memorandum Circular Nos. 63-2009 and 53-2013

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Codal Reference

Sec. 98 to Sec. 104 of the National Internal Revenue Code

Related Laws

Republic Act Nos. 579, 3062, 3676, 3850, 6110, 7499, 8424, 9159, 9275, 9500, 9647, 10066, 10072, 10073, 10083, 10174, 10390, 10618

Presidential Decree Nos. 69, 181, 205, 292, 294, 1773

Executive Order No. 419

Commonwealth Act No. 466

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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 against which   such credit is taken, which the donor's net gifts situated outside the Philippines taxable under this title bears to his entire net gifts.

3. What are the bases in the valuation of property? 

If the gift is made in property, the fair market value at that time will be considered the amount of gift.

In case of real property, 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), whichever is higher. (Sec. 88 and 102, NIRC as amended)

If there is no zonal value, the taxable base is the fair market value that appears in the tax declaration at the time of the gift 

4. For purposes of Donor’s Tax, what does the term “Net Gift” mean?

For purposes of the donor’s tax, “NET GIFT” shall mean the net economic benefit from the transfer that accrues to the donee. Accordingly, if a mortgaged property is transferred as a gift, but imposing upon the donee the obligation to pay the mortgage liability, then the net gift is measured by deducting from the fair market value of the property the amount of mortgage assumed. (sec. 11, RR No. 2-2003)

5. Under R.A. No. 7166, 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. 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.

Section 99 (C) of the Tax Code, as amended, provides that any contribution in cash or in kind for campaign purposes shall be governed by R.A. No. 7166 or the Election Code.

Section 13 of the R.A. No. 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, duly reported to the Commission shall not be subject to the payment of any gift tax (donor’s tax). Accordingly, the BIR can impose donor’s tax on contributions of this nature. (Q-14, RMC No. 63-2009)

6. For purposes of Donor’s Tax, 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, and therefore, donation to him shall not be considered as donation made to stranger. (sec. 10, RR No. 2-2003)

7. For purposes of Donor’s Tax, 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. 10, RR No. 2-2003)

8. Are gratuitous donations to Homeowners’ Associations subject to Donor’s Tax?

Gifts, donations, 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, as amended. 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. (II, RMC No. 53-2013)

9. Is an onerous donation or donation in exchange for goods, services or use or lease of properties to Homeowners’ Association subject to Donor’s Tax?

Pursuant to RMC No. 9-2013, Associations are subject to the corresponding internal revenue taxes imposed under the Tax Code of 1997 on their income of whatever kind and character. In this regard, contributions to associations in exchange for goods, services and use of properties constitute as other assessments/charges from activity in exchange for the performance of a service, use of properties or delivery of an object. As such, these fees are income on the part of the associations that are subject to income tax under Section 27 of the Tax Code, as amended. (III, RMC No. 53-2013)

10. 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, other than real property referred to in Section 24 (D) of the NIRC, as amended, is transferred for less than adequate and full consideration in money or money’s worth, then the amount by which the fair market value of the property exceeded the value of the consideration shall, for the purpose of Donor’s Tax, be deemed a gift, and shall be included in computing the amount of gifts made during the calendar year. (Sec. 100, NIRC, as amended)

11. 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, but not limited to the following:

    • Rural Farm School (Sec. 14, R.A. No. 10618)
    • People’s Television Network, Incorporated (Sec. 15, R.A. No. 10390)
    • People’s Survival Fund (Sec. 13, R.A. No. 10174)
    • Aurora Pacific Economic Zone and Freeport Authority (Sec. 7, R.A. No. 10083)
    • Girl Scouts of the Philippines (Sec. 11, R.A. No. 10073)
    • Philippine Red Cross (Sec. 5, R.A. No. 10072)
    • Tubbataha Reefs Natural Park (Sec. 17, R.A. No. 10067)
    • National Commission for Culture and the Arts (Sec. 35, R.A. No. 10066)
    • Philippine Normal University (Sec. 7, R.A. No. 9647)
    • University of the Philippines (Sec. 25, R.A. No. 9500)
    • National Water Quality Management Fund (Sec. 9, R.A. No. 9275)
    • Philippine Investors Commission (Sec. 9, R.A. No. 3850)
    • Ramon Magsaysay Award Foundation (Sec. 2, R.A. 3676)
    • Philippine-American Cultural Foundation (Sec. 4, P.D. 3062)
    • International Rice Research Institute (Art. 5(2), PD 1620)
    • Task Force on Human Settlements (Sec. 3(b)(8), E.O. 419)
    • National Social Action Council (Sec. 4, P.D. 294)
    • Aquaculture Department of the Southeast Asian Fisheries Development Center (Sec. 2, P.D. 292)
    • Development Academy of the Philippines (Sec. 12, PD 205)
    • Integrated Bar of the Philippines (Sec. 3, PD 181)

12. How do we determine the fair market value of the unlisted stocks?

In determining the value of the shares, the Adjusted Net Asset Method shall be used whereby all assets and liabilities are adjusted to fair market values. The net of adjusted asset minus the adjusted liability value is the indicated value of the equity.  

 For purposes of this item, 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, or      

(b) The fair market value as shown in the schedule of values fixed by the Provincial and City Assessors, or                                  

(c) The fair market value as determined by Independent Appraiser. (RR NO. 6-2013) (Annex U)

 

 

 

 

 

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