Lesson 8 Donors Tax

LESSON 7: DONORS TAX
DONOR’S TAX
• Donor’s Tax is imposed upon any

person, natural or juridical , resident or
non-resident , who transfers or causes to
transfer by gift or donation, wether
direct or indirect, in trust or otherwise,
real, personal, tangible or intangible
property. Hereunder are some features
for your better appreciation.
A tax upon one’s gratitude to others
• Donor’s tax in the Philippines is
imposed upon gratuitous transfers of
property from one person to another
during their lifetime .
• Gratuitous means that the property is

transferred free of charge or that the
donee (the recipient) does not pay for it
in receiving the property from the donor
(the giver).
Imposed also on indirect donations
• A donation need not be explicit to be taxable. Section 100 of
the Tax Code of the Philippines imposes a tax on transfers for
insufficient consideration.
• This means that if you sell a property for a price much lower
than the market value of that property or a similar property,
donor’s tax in the Philippines will apply.
• This may happen to parties making unrealistic
sales or transfers of property making it appear to
be a sale for an insufficient selling process or
consideration to avoid donor’s tax in the
Philippines or death taxes-estate tax in the
Philippines.
Imposed upon valid donations or transfer
• To be taxable , a donation or transfer must be validly made to

produce the legal effects of a transfer of title.
• Validity of donation or transfer would depend on the capacity

of the parties to make a valid donation or transfer , and the
formalities of the deed of donation or deed of transfer.
Imposed upon the donor of the property
• In donor’s tax in the Philippines, it is the donor or giver who
is bound to pay the tax and not the donee.
• The agreement in the deed of donation that the donee or
receipient of the property will be the one to pay the donor’s
tax is not bonding with respect to the tax authority- Bureau of
Internal Revenue (BIR).
• It is but logical to make the donor liable because if it has the
means to donate a property free of charge , then, it reasonably
follows that it is capable of paying the tax.
Exemptions from donor’s tax Philippines
• Taxation is the rule, exemption is the exception applied to donor’s tax.

Certain exemptions are authorized by laws based on the donation itself
or based on the status of the donee.
• Example of tax exempt donations are donations on account of

marriage up to P 10,000, donations to accredited donee institutions
under certain conditionas, donations to specific entitites- Integrated
Bar of the Philippines, Ramon Magsaysay Award Foundation, and
many more to mention.
Filing of donor’s tax returns
• A donor’s tax return in the Philippines or BIR form NO. 1800 is
required to be filed and paid not later than the 30th day following the
date of every donation made.
• Failure to file and pay donor’s tax is subject to penalties - 25%
surcharge (50% if fraudulent), 20% interest, and compromise penalties
ranging from P200.00 to P25,000.00
• TRAIN also simplifies the payment of donor’s taxes to a single tax
rate of 6% of net donations is imposed for gifts above P250,000 yearly
regardless of relationship to the donor.
Simplified Estate and Donor's Tax
• The TRAIN aims to simplify property purchases, transfers and
donations in order to make the land market more efficient thus ensuring
the usage of properties is maximized.
• The estate tax is now reduced to 6% based on the net value of the
property. It also has a standard deduction of ₱5 million as well as a ₱10
million exemption on the family home.
• The donor tax is also reduced to 6% of the net donations for gifts above
₱250,000 yearly.
How is Donor’s Tax in Philippines Computed?
Below is the sample of how Donor’s Tax is computed.
What Donation are exempted from Donor’s Tax in
Philippines?
• The following are exempt from donor’s tax:
• Gifts made to or for the use of the National Government.
• Gifts in favor of an educational and/or charitable, religious,

cultural or social welfare corporation, institution, accredited
nongovernment organization, trust or philanthropic
organization or research organization.
Provided that,
a. Not more than thirty (30%) of said gifts shall be used by such done
for administration purposes.
b. The non-stock entity shall pay no dividend,
c. Governed by trustees who receive no compensation, and
d. Devoting all its income to the accomplishment and promotion of the

purposes enumerated in its Articles of Incorporation.
What are the bases in the valuation of
property?
The properties comprising the gift/donation shall be valued based on
their fair market value as of the time of donation.
If the property is a real property, the fair market value thereof as of the
time of donation shall be, whichever is the higher of –
1. The fair market value as determined by the Commissioner, or
2. The fair market value as shown in the schedule of values fixed by the
provincial and city assessors.
Zonal Value
Market Value
Source: https://www.bir.gov.ph/index.php/zonal-
values.html#rdo021b
Donor’s Tax
Estate Tax
Capital Gains Tax

Lesson 8 Donors Tax

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LESSON 7: DONORS TAX

• Donor’s Tax is imposed upon any

• Gratuitous means that the property is

• To be taxable , a donation or transfer must be validly made to

• Validity of donation or transfer would depend on the capacity

• Taxation is the rule, exemption is the exception applied to donor’s tax.

• Example of tax exempt donations are donations on account of

• The following are exempt from donor’s tax:

• Gifts made to or for the use of the National Government.

• Gifts in favor of an educational and/or charitable, religious,

b. The non-stock entity shall pay no dividend,

c. Governed by trustees who receive no compensation, and

d. Devoting all its income to the accomplishment and promotion of the

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