Lecture 6 - Donor Tax
Lecture 6 - Donor Tax
Lecture 6 - Donor Tax
1. What is a donation?
Donation is an act of liberality whereby a person disposes gratuitously a thing or a right in favor
of another, who accepts it.
The law in force at the time of the perfection/completion of the donation shall govern the
imposition of the donor’s tax.
a. Those made between person who are guilty of adultery or concubinage at the time of
donation.
b. Those made between persons found guilty of the same criminal offense in consideration
thereof.
c. Those made to a public officer or his wife, descendants and ascendants, by reason of his
office.
d. Those made to incapacitated persons shall be void, though simulated under the guise of
another contract or through a person who is interposed.
e. Every donation between husband and wife during the marriage shall be void.
If the done is a stranger, the tax rate shall be 30% of the net gifts.
If the done is not a stranger, the tax rate shall be from 2% to 15% of the net gifts.
Stranger is a person who is not a brother, sister, spouse, ancestor and lineal descendant, or of a
relative by consanguinity in the collateral within the 4 th civil degree.
A legally adopted child is entitled to all rights and obligations provided by law to legitimate
children, and therefore, donation to him shall not be considered as donation made to stranger
Donation made between business organizations and those made between an individual and a
business organization shall be considered as donation made to a stranger. Any contribution in
cash or in kind to any candidate, political party or coalition of parties for campaign purposes
shall be governed by Election Code, as amended.
11. Are the rules for foreign tax credit applies to donor’s tax?
Yes, the rules in estate tax credit are the same, provided, the following are met:
The donor tax return is filed and the donor tax due is paid within thirty days after the date the
gift is made.
A. Resident
With an authorized agent bank, the Revenue District Officer, Revenue Collection Officer or
duly authorized Treasurer of the city of municipality where the donor was domiciled at the
time of transfer, or if there be no legal residence in the Philipines, with the office of the
Commissioner
B. Non-Resident
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.