CHAPTER II

DONOR'S TAX

SEC. 98. Imposition of Tax. -

(A) There shall be levied, assessed, collected and paid upon the transfer by any person, resident or nonresident, of the property by gift, a
tax, computed as provided in Section 99.

(B) The tax 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.

SEC. 99. Rates of Tax Payable by Donor. - “Sec. 99. Rate of Tax Payable by Donor.—

(A) In General. - The tax for each calendar year shall be

computed on the basis of the total net gifts made during the
“(A) In General.— The tax for each calendar year shall be six percent (6%)
calendar year in accordance with the following schedule:
computed on the basis of the total gifts in excess of Two hundred fifty
thousand pesos (₱250,000) exempt gift made during the calendar year.
If the net gift is:

Over But Not Over The Tax Shall Plus Of the

be Excess Over “(B) Any contribution in cash or in kind to any candidate, political party or
P 100,000 Exempt
P 100,000 200,000 0 2% P100,000 coalition of parties for campaign purposes shall be governed by the
200,000 500,000 2,000 4% 200,000 Election Code, as amended.”
500,000 1,000,000 14,000 6% 500,000
1,000,000 3,000,000 44,000 8% 1,000,000
3,000,000 5,000,000 204,000 10% 3,000,000
5,000,000 10,000,000 404,000 12% 5,000,000
10,000,000 1,004,000 15% 10,000,000
(B) Tax Payable by Donor if Donee is a Stranger. - When the
donee or beneficiary is stranger, the tax payable by the donor
shall be thirty percent (30%) of the net gifts. For the purpose
of this tax, a 'stranger', is a person who is not a:

(1) Brother, sister (whether by whole or half-blood), spouse,

ancestor and lineal descendant; or

(2) Relative by consanguinity in the collateral line within the

fourth degree of relationship.

(C) 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, as amended.

SEC. 100. Transfer for Less Than Adequate and Full
Consideration. - Where property, other than real property
referred to in Section 24(D), is transferred for less than an
adequate and full consideration in money or money's worth,
then the amount by which the fair market value of the
property exceeded the value of the consideration shall, for the
purpose of the tax imposed by this Chapter, be deemed a gift,
and shall be included in computing the amount of gifts made
during the calendar year.
“Sec. 100. Transfer for Less Than Adequate and Full Consideration.—
Where property, other than real property referred to in Section 24(D), is
transferred for less than an adequate and full consideration in money or
money’s worth, then the amount by which the fair market value of the
property exceeded the value of the consideration shall, for the purpose of
the tax imposed by this Chapter, be deemed a gift, and shall be included in
computing the amount of gifts made during the calendar year: Provided,
however, That a sale, exchange, or other transfer of property made in the
ordinary course of business (a transaction which is a bona fide, at arm’s
length, and free from any donative intent), will be considered as made for
an adequate and full consideration in money or money’s worth.”

SEC. 101. Exemption of Certain Gifts. - The following gifts or “Sec. 101. Exemption of Certain Gifts.— The following gifts or donations
donations shall be exempt from the tax provided for in this shall be exempt from the tax provided for in this Chapter:
Chapter:

“(A) In the Case of Gifts Made by a Resident.—

(A) In the Case of Gifts Made by a Resident. -

“(1) Gifts made to or for the use of the National Government or any entity
(1) Dowries or gifts made on account of marriage and before created by any of its agencies which is not conducted for profit, or to any
its celebration or within one year thereafter by parents to political subdivision of the said Government; and
each of their legitimate, recognized natural, or adopted
children to the extent of the first Ten thousand pesos
(P10,000): “(2) 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 institution or
(2) Gifts made to or for the use of the National Government organization: Provided, however, That not more than thirty percent (30%)
or any entity created by any of its agencies which is not of said gifts shall be used by such donee for administration purposes. For
conducted for profit, or to any political subdivision of the said the purpose of this exemption, a ‘non-profit educational and/or charitable
Government; and corporation, institution, accredited nongovernment organization, trust or
philanthropic organization and/or research institution or organization’ is a
school, college or university and/or charitable corporation, accredited
(3) Gifts in favor of an educational and/or charitable, religious, nongovernment organization, trust or philanthropic organization and/ or
cultural or social welfare corporation, institution, accredited research institution or organization, incorporated as a nonstock entity,
nongovernment organization, trust or philanthropic paying no dividends, governed by trustees who receive no compensation,
organization or research institution or organization: Provided, and devoting all its income, whether students’ fees or gifts, donation,
however, That not more than thirty percent (30%) of said subsidies or other forms of philanthropy, to the accomplishment and
gifts shall be used by such donee for administration purposes. promotion of the purposes enumerated in its Articles of Incorporation.
For the purpose of this exemption, a 'non-profit educational
and/or charitable corporation, institution, accredited
nongovernment organization, trust or philanthropic “x x x.”
organization and/or research institution or organization' is a
school, college or university and/or charitable corporation,
accredited nongovernment organization, trust or philanthropic
organization and/or research institution or organization,
incorporated as a non-stock entity, paying no dividends,
governed by trustees who receive no compensation, and
devoting all its income, whether students' fees or gifts,
donation, subsidies or other forms of philanthropy, to the
accomplishment and promotion of the purposes enumerated
in its Articles of Incorporation.

(B) In the Case of Gifts Made by a Nonresident not a Citizen

of the Philippines. -

(1) 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.

(2) Gifts in favor of an educational and/or charitable, religious,

cultural or social welfare corporation, institution, foundation,
trust or philanthropic organization or research institution or
organization:Provided, however, That not more than thirty
percent (30%) of said gifts shall be used by such donee for
administration purposes.

(C)Tax Credit for Donor's Taxes Paid to a Foreign Country. -

(1) 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.

(2) Limitations on Credit. - The amount of the credit taken

under this Section shall be subject to each of the following
limitations:

(a) 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

(b) 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.

SEC. 102. Valuation of Gifts Made in Property. - If the gift is made in property, the fair market value thereof at the time of the gift shall be
considered the amount of the gift. In case of real property, the provisions of Section 88(B) shall apply to the valuation thereof.

SEC. 103. Filing of Return and Payment of Tax. -

(A) Requirements. - any individual who makes any transfer by gift (except those which, under Section 101, are exempt from the tax
provided for in this Chapter) shall, for the purpose of the said tax, make a return under oath in duplicate. The return shall set forth:

(1) Each gift made during the calendar year which is to be included in computing net gifts;

(2) The deductions claimed and allowable;

(3) Any previous net gifts made during the same calendar year;

(4) The name of the donee; and

(5) Such further information as may be required by rules and regulations made pursuant to law.

(B) Time and Place of Filing and Payment - The return of the donor required in this Section shall be filed within thirty (30) days after the
date the gift is made and the tax due thereon shall be paid at the time of filing. Except in cases where the 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 of 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.

SEC. 104. Definitions. - For purposes of this Title, the terms 'gross estate' and 'gifts' include real and personal property, whether tangible or
intangible, or mixed, wherever situated: Provided, however, That where the decedent or donor was a nonresident alien at the time of his
death or donation, as the case may be, his real and personal property so transferred but which are situated outside the Philippines shall not
be included as part of his 'gross estate' or 'gross gift': Provided, further, That franchise which must be exercised in the Philippines; shares,
obligations or bonds issued by any corporation or sociedad anonima organized or constituted in the Philippines in accordance with its laws;
shares, obligations or bonds by any foreign corporation eighty-five percent (85%) of the business of which is located in the Philippines;
shares, obligations or bonds issued by any foreign corporation if such shares, obligations or bonds have acquired a business situs in the
Philippines; shares or rights in any partnership, business or industry established in the Philippines, shall be considered as situated in the
Philippines: Provided, still further, that no tax shall be collected under this Title in respect of intangible personal property:

(a) if the decedent at the time of his death or the donor at the time of the donation was a citizen and resident of a foreign country
which at the time of his death or donation did not impose a transfer tax of any character, in respect of intangible personal property
of citizens of the Philippines not residing in that foreign country, or

(b) if the laws of the foreign country of which the decedent or donor was a citizen and resident at the time of his death or donation
allows a similar exemption from transfer or death taxes of every character or description in respect of intangible personal property
owned by citizens of the Philippines not residing in that foreign country.

The term 'deficiency' means:

(a) the amount by which tax imposed by this Chapter exceeds the amount shown as the tax by the donor upon his return; but the
amount so shown on the return shall first be increased by the amount previously assessed (or Collected without assessment) as a
deficiency, and decreased by the amounts previously abated, refunded or otherwise repaid in respect of such tax, or

(b) if no amount is shown as the tax by the donor, then the amount by which the tax exceeds the amounts previously assessed, (or
collected without assessment) as a deficiency, but such amounts previously assessed, or collected without assessment, shall first be
decreased by the amount previously abated, refunded or otherwise repaid in respect of such tax.