1 FREQUENTLY ASKED QUESTIONS: DONORS TAX
1. Who are required to file the Donor’s Tax
Return?
Every person, whether natural or juridical,
resident or non-resident, who transfers or
causes to transfer property by gift, whether
in trust or otherwise, whether the gift is
direct or indirect and whether the property
is real or personal, tangible or intangible.
2. What donations are tax exempt?
A. In the Case of Gifts made by a Resident
(Sec. 101 (A), NIRC as amended)
 Dowries or donations
made on account of
marriage before its
celebration or within one
year thereafter, by
parents to each of their
legitimate, recognized
natural, or adopted
children to the extent of
the first P10,000
 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
 Gifts in favor of an
educational and/or
charitable, religious,
cultural or social welfare
corporation, institution,
accredited non-
government organization,
trust or philantrophic
organization or research
institution or
organization, provided not
more than 30% of said
gifts will be used by such
donee for administration
purposes
B. In the Case of Gifts Made by a
Nonresident not a Citizen of the
Philippines (Sec. 101 (B), NIRC as amended)

 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
 Gifts in favor of an
educational and/or
charitable, religious,
cultural or social welfare
corporation, institution,
accredited non-
government organization,
trust or philantrophic
organization or research
institution or
organization, provided not
more than 30% of said
gifts will be used by such
donee for administration
purposes
C. Tax Credit for Donor's Taxes Paid to a
Foreign Country (Sec. 101 (C), NIRC as
amended)
 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.
 Limitations on Credit. -
The amount of the credit
taken under this Section
shall be subject to each of
the following limitations:
- 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
- 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.
3. What are the bases in the valuation of
property?
2 FREQUENTLY ASKED QUESTIONS: DONORS TAX
If the gift is made in property, the fair
market value at that time will be considered
the amount of gift.
In case of real property, the taxable base is
the fair market value as determined by the
Commissioner of Internal Revenue (Zonal
Value) or fair market value as shown in the
latest schedule of values fixed by the
provincial and city assessor (MV per Tax
Declaration), whichever is higher. (Sec. 88
and 102, NIRC as amended)
If there is no zonal value, the taxable base is
the fair market value that appears in the tax
declaration at the time of the gift
4. For purposes of Donor’s Tax, what does
the term “Net Gift” mean?
For purposes of the donor’s tax, “NET GIFT”
shall mean the net economic benefit from
the transfer that accrues to the donee.
Accordingly, if a mortgaged property is
transferred as a gift, but imposing upon the
donee the obligation to pay the mortgage
liability, then the net gift is measured by
deducting from the fair market value of the
property the amount of mortgage assumed.
(sec. 11, RR No. 2-2003)
5. Under R.A. No. 7166, any contribution in
cash or in kind to any candidate or political
party or coalition of parties for campaign
purposes shall not be subject to the
payment of any gift tax. What instance will
it be subject to Donor’s Tax?
Those contributions in cash or in kind NOT
duly reported to the Commission on
Elections (COMELEC) shall not be subject to
donor’s tax.
Section 99 (C) of the Tax Code, as amended,
provides that any contribution in cash or in
kind for campaign purposes shall be
governed by R.A. No. 7166 or the Election
Code.
Section 13 of the R.A. No. 7166 specifically
states that any provision of law to the
contrary notwithstanding any contribution
in cash or kind to any candidate or political
party or coalition of parties for campaign
purposes, duly reported to the Commission
shall not be subject to the payment of any
gift tax (donor’s tax). Accordingly, the BIR
can impose donor’s tax on contributions of
this nature. (Q-14, RMC No. 63-2009)
6. For purposes of Donor’s Tax, is a legally
adopted child considered stranger?
A legally adopted child is entitled to all the
rights and obligations provided by law to
legitimate children, and therefore, donation
to him shall not be considered as donation
made to stranger. (sec. 10, RR No. 2-2003)
7. For purposes of Donor’s Tax, are
donations between businesses considered
donations made between strangers?
Donation made between business
organizations and those made between an
individual and a business organization shall
be considered as donation made to a
stranger. (sec. 10, RR No. 2-2003)
8. Are gratuitous donations to
Homeowners’ Associations subject to
Donor’s Tax?
Gifts, donations, and other contributions
received by the Homeowners’ Associations
(Associations) are subject to the payment of
donor’s tax pursuant to Section 98 and 99
of the Tax Code, as amended. Endowment
or gifts received by such associations are
not exempt from donor’s tax considering
that gifts to Associations are not qualified
for exemption under Section 101(A)(3) of
the Tax Code. (II, RMC No. 53-2013)
9. Is an onerous donation or donation in
exchange for goods, services or use or lease
of properties to Homeowners’ Association
subject to Donor’s Tax?
Pursuant to RMC No. 9-2013, Associations
are subject to the corresponding internal
revenue taxes imposed under the Tax Code
of 1997 on their income of whatever kind
and character. In this regard, contributions
to associations in exchange for goods,
services and use of properties constitute as
other assessments/charges from activity in
exchange for the performance of a service,
use of properties or delivery of an object. As
such, these fees are income on the part of
the associations that are subject to income
tax under Section 27 of the Tax Code, as
amended. (III, RMC No. 53-2013)
3 FREQUENTLY ASKED QUESTIONS: DONORS TAX
10. What is the proper treatment for
transactions involving transfer of property
other than real property referred to in
Section 24 (D) for less than adequate and
full consideration?
Where property, other than real property
referred to in Section 24 (D) of the NIRC, as
amended, is transferred for less than
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 Donor’s Tax, be
deemed a gift, and shall be included in
computing the amount of gifts made during
the calendar year. (Sec. 100, NIRC, as
amended)
11. What entities are considered exempted
from Donor’s Tax under special laws?
The list below consists of entities
considered Donor’s Tax exempt under
special laws including, but not limited to the
following:
 Rural Farm School (Sec.
14, R.A. No. 10618)
 People’s Television
Network, Incorporated
(Sec. 15, R.A. No. 10390)
 People’s Survival Fund
(Sec. 13, R.A. No. 10174)
 Aurora Pacific Economic
Zone and Freeport
Authority (Sec. 7, R.A. No.
10083)
 Girl Scouts of the
Philippines (Sec. 11, R.A.
No. 10073)
 Philippine Red Cross (Sec.
5, R.A. No. 10072)
 Tubbataha Reefs Natural
Park (Sec. 17, R.A. No.
10067)
 National Commission for
Culture and the Arts (Sec.
35, R.A. No. 10066)
 Philippine Normal
University (Sec. 7, R.A. No.
9647)
 University of the
Philippines (Sec. 25, R.A.
No. 9500)
 National Water Quality
Management Fund (Sec.
9, R.A. No. 9275)
 Philippine Investors
Commission (Sec. 9, R.A.
No. 3850)
 Ramon Magsaysay Award
Foundation (Sec. 2, R.A.
3676)
 Philippine-American
Cultural Foundation (Sec.
4, P.D. 3062)
 International Rice
Research Institute (Art.
5(2), PD 1620)
 Task Force on Human
Settlements (Sec. 3(b)(8),
E.O. 419)
 National Social Action
Council (Sec. 4, P.D. 294)
 Aquaculture Department
of the Southeast Asian
Fisheries Development
Center (Sec. 2, P.D. 292)
 Development Academy of
the Philippines (Sec. 12,
PD 205)
 Integrated Bar of the
Philippines (Sec. 3, PD
181)
12. How do we determine the fair market
value of the unlisted stocks?
In determining the value of the shares, the
Adjusted Net Asset Method shall be
used whereby all assets and liabilities are
adjusted to fair market values. The net of
adjusted asset minus the adjusted liability
value is the indicated value of the equity.
For purposes of this item, the appraised
value of real property at the time of sale
shall be the highest among the following:
(a) The fair market value as determined by
the Commissioner, or
(b) The fair market value as shown in the
schedule of values fixed by the Provincial
and City Assessors, or
(c) The fair market value as determined by
Independent Appraiser. (RR NO. 6-2013)
(Annex U)