Module 5 - Donors Tax
Module 5 - Donors Tax
ABSTRACTION
DONOR’S TAX
1. Donation Definition
Donation is an act of liberality whereby a person disposes gratuitously of a thing or right
in favor of another, who accepts it.
2. Donor’s taxpayer
Donor’s tax is imposed upon the transfer of the property by gift by any person, resident or
nonresident.
Donor’s tax is imposed 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.
However, where the donor was a nonresident alien at the time of donation, only the property
located in the Philippines shall form part of his gross gift. (Non-resident alien)
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MINDANAO STATE UNIVERSITY - GENERAL SANTOS CITY
COLLEGE OF BUSINESS ADMINISTRATION AND ACCOUNTANCY
DEPARTMENT OF ACCOUNTANCY
5. Reciprocity Clause
Receprocity clause (for nonresident alien and intangible personal property). No transfer
tax is imposed in respect of intangible personal property.
A. The foreign country has no donor’s tax law.
B. The foreign country has a donor’s tax law but provides exemption to NRA.
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. Therefore.exempt.
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MINDANAO STATE UNIVERSITY - GENERAL SANTOS CITY
COLLEGE OF BUSINESS ADMINISTRATION AND ACCOUNTANCY
DEPARTMENT OF ACCOUNTANCY
B. Gifts in favor of an education and/or charitable, religious, cultural or social welfare corporation,
institution, accredited non-government organization, trust or philanthropic organization or
research institution or organization: Provided however, that more than 30% of said gifts shall be
sued by such donee for administration purposes. For the purpose of this exemption, a non-profit
education and/or charitable corporation, institution, accredited non-government organization, trust
or philanthropic organizations or research institution or organization is a:
I. School, college or university and/or charitable corporation, accredited non-government
organization, trust or philanthropic organization or research institution or organization,
II. Incorporated as a non-stock entity
III. Paying no dividends
IV. Governed by trustees who receive no compensation
V. Devoting all its income, whether students’ fees or gifts, donation, subsidies or other forms of
philanthropy, to the accomplishments and promotion of the purposes enumerated in its Articles
of Incorporation.
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MINDANAO STATE UNIVERSITY - GENERAL SANTOS CITY
COLLEGE OF BUSINESS ADMINISTRATION AND ACCOUNTANCY
DEPARTMENT OF ACCOUNTANCY
Except in cases where Commissioner otherwise permits, the return shall be filed and the tax paid
to an authorized agent bank, the Revenue District Officer, Revenue Collection Officer or duly
authorized Treasurer if the city or municipality where the donor was domiciled at the time of the
transfer, or if there be no legal residence in the Philippines, with the Office of the Commissioner.
In the case of gifts made by a nonresident, 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.
EXERCISE 1: Determine the amount to be included as part of GROSS GIFT and ALLOWABLE
DEDUCTION in each independent cases below:
1. Real property donated valued at P1,500,000 with unpaid mortgage of P300,000, assumed by
the donee. P1,500,000 and P300,000
2. Real property donated valued at P1,200,000 with unpaid real estate tax of P150,000, not
assumed by the donee. P1.2M and 0
3. Real property donated valued at P1,500,000 and the donee agreed to assume applicable
donor’s tax of P450,000. P1.5M and P0
4. Personal property donated valued at P100,000, the donor provided that P10,000 of the property
donated transferred by the donee to a social welfare organization. P100,000 and P10,000
5. Personal property donated valued at P120,000, the donor did not provide diminution on the
property donated. P120,000 and P0
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MINDANAO STATE UNIVERSITY - GENERAL SANTOS CITY
COLLEGE OF BUSINESS ADMINISTRATION AND ACCOUNTANCY
DEPARTMENT OF ACCOUNTANCY
February 15 - Car worth P400,000 to their legitimate son, A, on account of marriage dated
February 10, 2018. The car was mortgaged for P200,000, only 50% of the mortgage was assumed
by the donee.
March 30 - To Mr. X’ brother, his capital property worth P200,000 on account of marriage 3 months
ago. They agreed that the donee shall pay the donor’s tax thereon.
October 12 - To Charmaine on account of the same marriage, conjugal car worth P400,000 with
P200,000 unpaid mortgage. Charmaine assumed 50% of the unpaid mortgage.
December 15 - Parcel of land valued at P500,000 to their two sons on account of their graduation.
The land was co-owned by the couple and a friend, Cliff who agreed to donate the same. The
share of Cliff in the property is valued at P100,000.
- END-
REFERENCES
Tabag, E. D. (2019). Transfer and Business Taxation. Manila: Info Page.
Valencia, E. G. (2017). Transfer and Business Taxation. Baguio City: Valencia Educational
Supply.