DONOR’S TAX

DEFINITION:

Art. 725. Donation is an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another, who accepts it. (Civil Code) 

It is a tax imposed on the exercise of the donor’s right during lifetime to transfer property to others in the form of a gift. Hence, donor’s tax is not a property tax but an excise tax imposed on the transfer of property by way of gift inter-vivos. 

Donor’s Tax is a direct tax because it is a tax imposed on the donor and determined with reference to all donor’s gifts.  Applies to both natural and juridical person

Completion and Perfection of Donation: The donor’s tax shall apply if there is already completed gift. The transfer of property is perfected from the moment the donor knows the acceptance by the donee. On the other hand, it is completed by delivery of the donated property to the donee. The Law that governs the imposition of donor’s tax is the law at the time of the perfection/completion of the donation. 

ELEMENTS OF DONATION:

  1. Capacity of the donor to make donation
  2. Donative Intent or intent to make a gift on the part of donor
    • If a gift is indirect, taking place by way of sale, exchange and other transfer (transfer for inadequate consideration), donative intent is not necessary. 
    • Donative Intent must be followed by a donative act to constitute a gift

TAX RATE (Sec. 99[A]):

(A) In General. – The tax for each calendar year shall be six percent (6%) computed on the basis of the total gifts in excess of Two hundred fifty thousand pesos (P250,000) exempt gift made during the calendar year.

Donations shall be subject to donor’s tax applicable when the donations are made. Only donations made on or after January 1, 2018 shall be subject to the donor’s tax rate provided under the TRAIN Law as implemented by these Regulations. The computation of the donor’s tax is on a cumulative basis over a period of one calendar year. Husband and wife are considered as separate and distinct taxpayers for purposes of the donor’s tax.

Illustration: Donations were made on January 30, 2018 at P2,500,000; on March 30, 2018 at P1,000,000; and August 15, 2018 at P500,000.

Date of DonationAmountDonor’s Tax
January 30, 2018
2,500,000 – 250,000 Exempt gift = 2,250,0002,250,000 * 6%
= 135,000
March 30, 2018January 30, 20181,000,000 + 2,500,000 – 250,000 Exempt gift = 3,250,0003,250,000 * 6% =
195,000 – 135,000 (tax paid)= 60,000 Tax payable/due for March Donation
August 15, 2018 Add: January 2018March 2018 donationLess: Exempt Gift500,000 + 1,000,000 + 2,500,000 – 250,000 Exempt gift = 3,750,000 3,750,000 * 6% = 225,000- 195,000= 30,000 Tax payable/due for August Donation

FILING OF RETURN (RR No. 12-2018)

A. Requirements:

Any person making a donation (whether direct or indirect), unless the donation is specifically exempt under the NIRC or other special laws, is required, for every donation, to accomplish under oath a donor’s tax return in duplicate. The return shall set forth:

  1. Each gift made during the calendar year which is to be included in gifts;
  2. The deductions claimed and allowable;
  3. Any previous net gifts made during the same calendar year;
  4. The name of the donee; and
  5. Such further information as the Commissioner may require.

B. Where to File the Donor’s Tax Return and Pay the Tax Due

Donor – resident citizen shall be filed and the tax paid to an AAB, the Revenue District Officer and Revenue Collection Officer having jurisdiction over the place where the donor is domiciled at the time of the transfer
no legal residence in the Philippinesthe Office of the Commissioner.
gifts made by a non-residentthe return may be 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.
For this purpose, the term “OFFICE OF THE COMMISSIONER” 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.

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