University of St.

La Salle

STUDENT HANDOUTS
TAXATION M.V.U. SIA
TAX.202—DONOR’S TAX MAY 2022 CPALE REVIEW

LEARNING OBJECTIVES

1. Gross gift 5. Venue and time of payment

2. Exemptions 6. Modes of payment
3. Tax rates 7. Administrative requirements
4. Venue and time of filing of tax returns

REVIEW NOTES

NATURE OF DONOR’S TAX

It is a tax on the privilege of the donor to give; it is not a property
tax, but is a tax imposed on the transfer of property by way of
gift inter vivos (donation).
DONATION
Donation is act of liberality whereby a person disposes
gratuitously of a thing or right in favor of another, who accepts
it (Art. 725, New Civil Code).
PURPOSES OF DONOR’S TAX
3) Donative intent
4) Acceptance of the gift by the donee
The transfer of property by gift is perfected from the
moment the donor knows of the acceptance by the donee.
5) Delivery, whether actual or constructive, of the subject
matter
The transfer of the property is completed by the delivery,
either actually or constructively, of the donated property to
the done.

1) To supplement the estate tax The donor’s tax shall not apply unless and until there is a
completed gift.
2) To prevent the avoidance of income taxes. Without donor’s
tax, the donor may escape the progressive rates of income A gift that is incomplete because of reserved powers,
taxation through the simple expedient way of splitting his becomes complete when either:
income among numerous donees. 1) The donor renounces the power; or
2) His right to exercise the reserved power ceases because
ESSENTIALS OF A TAXABLE DONATION of the happening of some event or contingency or the
fulfilment of some condition, other than because of the
1) Capacity of the donor to transfer property donor’s death.
2) Formal Requisites
The law in force at the time of the completion of the
FORMAL REQUISITES donation shall govern the imposition of donor’s tax.
PERSONAL PROPERTY REAL
PROPERTY CLASSIFICATION OF DONORS
Amount of P5,000 or less More than Regardless
donation P5,000 of amount 1) Citizen or Resident (RC/NRC/RA)
Form of Oral or in In In public 2) Non-resident Alien (NRA)
Donation writing writing, instrument, a. With reciprocity
otherwise otherwise b. Without reciprocity
VOID VOID
Additional Oral donation None None FORMAT OF COMPUTATION
Requirement requires
simultaneous FIRST DONATION OF THE YEAR
delivery Gross Gifts PXXX
Less: Exclusions/Deductions (XXX)
In order that the donation of an immovable may be valid, it Net Gifts PXXX
must be made in a public document specifying therein the Less: Exempt gift (250,000)
property donated. The acceptance may be made in the same Net Gifts subject to Tax PXXX
Deed of Donation or in a separate public document, but it Multiply: Rate 6%
shall not take effect unless it is done during the lifetime of Donor’s Tax PXXX
the donor. If the acceptance is made in a separate Less: Tax Credit (XXX)
instrument, the donor shall be notified in an authentic form, Donor’s Tax Payable PXXX
and this step shall be noted in both instruments.

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TAXATION | TAX.202—DONOR’S TAX University of St. La Salle

SECOND AND SUBSEQUENT DONATION WITHIN Husband and wife are considered as separate and distinct
THE YEAR taxpayers for purposes of the donor’s tax. However, if what was
Gross Gifts, Current PXXX donated is a conjugal or community property and only the
Less: Exclusions/Deductions, husband signed the deed of donation, there is only one donor for
Current (XXX) donor’s tax purposes, without prejudice to the right of the wife
Net Gifts, Current PXXX to question the validity of the donation without her consent
Add: Prior Net Gifts During the pursuant to the pertinent provisions of the Civil Code of the
Calendar Year XXX Philippines and the Family Code of the Philippines.
Total Net Gifts PXXX
Less: Exempt gift (250,000) TRANSFER FOR LESS THAN ADEQUATE AND FULL
Total Net Gifts subject to Tax PXXX CONSIDERATION
Multiply: Rate 6%
Where property, other than real property referred to in Section
Donor’s Tax PXXX
24 (D) of the NIRC, is transferred for less than an adequate and
Payments for Prior Gifts During the (XXX)
full consideration in money or money’s worth, then the amount
Calendar Year
by which the fair market value of the property exceeded the
Foreign donor’s tax paid (subject to
value of the consideration shall, for the purpose of computing
limitation) (XXX)
donor’s tax, be deemed a gift, and shall be included in computing
Donor’s Tax Payable PXXX
the amount of gifts made during the calendar year: Provided,
however, that a sale, exchange, or other transfer of property
The computation of the donor’s tax is on a cumulative basis over made in the ordinary course of business (a transaction that is
a period of one calendar year. bona fide, at arm’s length, and free from any donative intent)
will be considered as made for an adequate and full
GROSS GIFT consideration in money or money’s worth.
Transfers subject to donor’s tax: VALUATION OF GIFTS MADE IN PROPERTY
1) Direct gift;
2) Gift through creation of a trust; The valuation of gifts in the form of property shall follow the
3) Condonation of debt; rules set forth under Estate Tax: Provided, That the reckoning
4) Repudiation of inheritance if: point for valuation shall be the date when the donation is made.
a. Specifically, and categorically done in favor of identified
heirs; and EXEMPTIONS OR DEDUCTIONS FROM GROSS GIFT
b. To the exclusion or disadvantage of other co-heirs.
1) Gifts made to or for the use of the National Government or
5) Renunciation by the surviving spouse of his/her share in any entity created by any of its agencies which is not
the conjugal partnership or absolute community after the conducted for profit, or to any of its political subdivision of
dissolution of the marriage in favor of the heirs of the the said government.
deceased spouse or any other person/s;
2) Gifts in favor of an educational and/or charitable, religious,
6) Transfer for insufficient consideration cultural or social welfare corporation, institution,
accredited non-government organization, trust or
FMV at the time of sale PXXX philanthropic organization or research institution or
Less: Selling Price (XXX) organization: Provided, however, That not more than 30%
Taxable Gift PXXX of the said gifts shall be used for administration purposes.

EXCEPTION: Real property in the Philippines classified as For the purpose of this exemption, a “non-profit educational
capital asset subject to 6% final capital gains tax. and/or charitable corporation, accredited non-government
organization, trust of philanthropic organization and/or
COMPONENTS OF GROSS GIFT research institution or organization, incorporated as a non-
RP TPP IPP stock entity, paying no dividends, governed by trustees who
Donor w/i w/ w/in w/o w/in w/o receive no compensation, and devoting all its income,
n o whether students’ fees or gifts, donation, subsidies or other
RC/NRC/RA √ √ √ √ √ √ forms of philanthropy, to the accomplishment and
NRA w/o √ X √ X √ X promotion of the purposes enumerated in its Articles of
Reciprocity Incorporation.
NRA w/ √ X √ X X X
Reciprocity 3) Encumbrance on the property donated assumed by the
donee
Gift from Common Property
4) Diminution of gift provided by the donor
The gift is taxable one-half to each donor spouse.
5) Exemption under Special Laws
Donation between husband and wife during the marriage a. International Rice Research Institute
b. Ramon Magsaysay Foundation
GENERAL RULE: The gift is not taxable, as it is declared void by c. Integrated Bar of the Philippines
law. d. Development Academy of the Philippines
e. National Museum of the Philippines (RA No. 11333)
EXCEPTION: Moderate gifts between the spouses are valid. f. National Performing Arts Companies (RA No. 11392)

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TAXATION | TAX.202—DONOR’S TAX
g. National Library
h. Archives of the National Historical Institute
i. Museum of Philippine Costumes
j. Intramuros Administration
k. Political contributions
R.A. No. 11525/RR No. 1-2021
Beginning January 1, 2021 and during the period of the state of
calamity as declared under Proclamation No. 1021 dated
September 16, 2020 issued by the President of the Philippines,
the donation of COVID-19 vaccines through the COVID-19
Vaccination Program by:
1) The National Government, through the Department of
Health (DOH) and the National Task Force Against COVID-
19 (NTF);
2) any of the political subdivisions of the State; and
3) private entities, and international humanitarian
organizations, such as the Philippine Red Cross (PRC);
shall be exempt from donor’s tax. This will also be subject to
ordinary rules of deductibility as provided for in Section 34 (H)
of the NIRC of 1997, as amended, and its existing rules and
regulations, if applicable.
This exemption will only apply if the vaccines are not intended
for resale or other commercial use and shall be distributed
without any consideration from persons to be vaccinated.
Requirements:
1) Certified true copy of the COVID-19 vaccine procurement
agreement/multi-party agreement on the procurement by
the Local Government Units (LGUs) and private entities
shall include the DOH and the relevant supplier of the
COVID-19 vaccine;
2) Certified true copy of the COVID-19 vaccine’s Certificate of
Product Registration or Emergency Use Authorization
(EUA) issued by the Food and Drug Administration (FDA);
3) “Sworn Declaration” from the taxpayer-
buyer/importer/donee that the COVID-19 vaccines shall
not be intended for resale or other commercial use and shall
be distributed without consideration from persons to be
vaccinated, in accordance with the COVID-19 Vaccination
Program of the National Government. For private entities, a
statement shall be included that any such vaccines shall be
for the sole and exclusive use of such entities and their
related parties, if any; and
4) For COVID-19 vaccines donated to the entities mentioned
above, in addition to the foregoing requirements, the
following shall be presented:
a. for the National Government and LGUs, a certified true
copy of the duly accepted Deed of Donation; and
b. for private entities and international humanitarian
organizations, a certified true copy of the duly accepted
Deed of Donation and/or BIR Form 2322 (Certificate of
Donation).
NET GIFT
For purposes of the donor’s tax, “NET GIFT” shall mean the net
economic benefit from the transfer that accrues to the donee.
(RR No. 12-2018)
COMPUTATION OF THE DONOR’S TAX
Donations shall be subject to donor’s tax applicable when the
donations are made. Hence, for donor’s tax purposes, donations
made before January 1, 1998 shall be subject to the donor’s tax
computed on the basis of the old rates imposed under Section
University of St. La Salle
92 of the National Internal Revenue Code of 1977 (R.A. No.
7499), while donations made on or after January 1, 1998 until
December 31, 2017 shall be subject to donor’s tax computed in
accordance with the amended schedule of rates prescribed
under Section 99 of the National Internal Revenue Code of 1997
(R.A. No. 8424), implemented by RR No. 2-2003, as amended.
Only donations made on or after January 1, 2018 shall be subject
to the donor’s tax rate provided under the TRAIN Law.
The computation of the donor’s tax is on a cumulative basis over
a period of one calendar year.
FILING OF RETURNS AND PAYMENT OF DONOR’S TAX
Requirements
Any person making 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 done; and
5. Such further information as the Commissioner may require.
Time and place of filing and payment
The donor’s tax return shall be filed within thirty (30) days after
the date the gift is made or completed and the tax due thereon
shall be paid at the same time that the return is filed.
Residents
Unless the Commissioner otherwise permits, the return 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, or if
there be no legal residence in the Philippines, with the Office of
the Commissioner.
Non-residents
In the case of gifts made by a non-resident, the 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.
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 RDO No. 39-South Quezon
City.
Notice of donation by a donor engaged in business
In order to be exempt from donor’s tax and to claim full
deduction of the donation given to qualified-donee institutions
duly accredited, the donor engaged in business shall give a
notice of donation on every donation worth at least Fifty
Thousand Pesos (P50,000) to the RDO which has jurisdiction
over his place of business within thirty days after receipt of the
qualified donee institution’s duly issued Certificate of Donation,
which shall be attached to the said Notice of Donation, stating
that not more than thirty percent (30%) of the said
donation/gifts for the taxable year shall be used by such
accredited non-stock, non-profit corporation/NGO institution
(qualified-donee institution) for administration purposes
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TAXATION | TAX.202—DONOR’S TAX University of St. La Salle

pursuant to provisions of Section 101(A)(3) and (B)(2) of the

NIRC.

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