Description

Donors 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.

Tax Form

BIR Form 1800 Donors Tax Return

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. For manually issued title (red title), a certified true copy of the Original Certificate of
Title (OCT), Transfer Certificate of Title (TCT), or Condominium Certificate of Title in
case of a condo unit

For electronically issued title (blue title), a photocopy of the Original Certificate of Title
(OCT), Transfer Certificate of Title (TCT), or Condominium Certificate of Title in case of
a condo unit

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 Assessors 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

11. Special Power of Attorney (SPA) from the transacting party if the latter is not one of
the parties to the Deed of Transfer

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

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 donors 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. 2-2003, 6-2013, 6-2014

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

OPM-AS-APMD 2017-06-06

OPM-AS-APMD 2017-06-01

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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 Donors 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 Donors Tax, what does the term Net Gift mean?

For purposes of the donors 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 Donors Tax?

Those contributions in cash or in kind NOT duly reported to the Commission on

Elections (COMELEC) shall not be subject to donors 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 (donors tax). Accordingly, the BIR
can impose donors tax on contributions of this nature. (Q-14, RMC No. 63-2009)

6. For purposes of Donors 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 Donors 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 Donors Tax?

Gifts, donations, and other contributions received by the Homeowners Associations

(Associations) are subject to the payment of donors tax pursuant to Section 98 and 99
of the Tax Code, as amended. Endowment or gifts received by such associations are
not exempt from donors 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 Donors 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
moneys worth, then the amount by which the fair market value of the property
exceeded the value of the consideration shall, for the purpose of Donors 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 Donors Tax under special laws?

The list below consists of entities considered Donors Tax exempt under special laws
including, but not limited to the following:

Rural Farm School (Sec. 14, R.A. No. 10618)
Peoples Television Network, Incorporated (Sec. 15, R.A. No. 10390)
Peoples 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)