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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE
- Donor’s tax is an excise tax imposed on the privilege to transfer property by way of gift based on an act of liberality.
- It is not a tax on the property donated, but on the privilege to transfer property.The tax for each calendar year shall be six percent (6%) computed on the basis of the total net gifts in excess of PhP250,000.00 (formerly PhP100,000.00) exempt gift made during the calendar year.
- For purposes of the donor’s tax, “net gift” shall mean the net economic benefit from the transfer that accrues to the donee.
Donor’s tax
Donor’s tax is an excise tax imposed on the privilege to transfer property by way of gift inter vivos by any person, resident or non-resident, based on a pure act of liberality without any or less than adequate consideration and without any legal compulsion to give.
Jurisprudence says:
“Donor’s tax is not a tax on the property donated, but on the privilege to transfer property.” (Lladoc v. CIR, G.R. No. L-19201, June 16, 1965)
The National Internal Revenue Code, as amended by the Tax Reform for Acceleration and Inclusion (TRAIN), provides that:
“Section 98. Imposition of Tax. –
(A) There shall be levied, assessed, collected and paid upon the transfer by any person, resident or nonresident, of the property by gift, a tax, computed as provided in Section 99.
(B) 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. (Sections 98, National Internal Revenue Code)
Section 11 of Revenue Regulation No. 02-2003 states that:
“The transfer of property by gift is perfected from the moment the donor knows of the acceptance by the donee; it is completed by delivery, either actual or constructively, of the donated property to the donee.”
Moreover, the law in force at the time of the perfection or completion of the donation shall govern the imposition of the donor’s tax. (Section 11, Revenue Regulation No. 02-2003)
Rate of donor’s tax
The tax for each calendar year shall be six percent (6%) computed on the basis of the total net gifts in excess of PhP250,000.00 (formerly PhP100,000.00) exempt gift made during the calendar year. For purposes of the donor’s tax, “net gift” shall mean the net economic benefit from the transfer that accrues to the donee. (Section 12, Revenue Regulation No. 12-2018)
The law says:
Sec. 99. Rate of Tax Payable by Donor –
“(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 (₱250,000) exempt gift made during the calendar year.
“(B) 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.” (Sections 99, National Internal Revenue Code, as amended by TRAIN)
Related article: What donations are taxable?
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding taxation and taxpayer’s remedies, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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