DONOR’S TAX

EXEMPTIONS FROM GROSS GIFTS

- Gifts made to the national gov’t or any entity created by any of its agencies which is not
conducted for profit, or any political subdivision
- Gifts in favor of the following non- profit org.:
 Educational, Charitable, Religious, Cultural, Social welfare, Accredited NGO, trust or
Philanthropic org and Research Organization

Requisites:
- Not more than 30% of the said gifts shall be used for administrative purposes
- Non-profit org. Must be accredited by the Philippine Council for NGO certification (PCNC)
- Donor engaged in bsiness shall give notice on every donation worth atleast Php 50,000 on RDO
which has jurisdiction over his place of business, within 30 days from receipt of Certificate of
Donation, stating that it has complied with the 30% requirement.

Non-Profit Organization – Organized non-stock entity, paying no dividends and governed by trustees
who receive no compensations

Requisites:
- Php 250,000 of the net gift

Gifts exempted under special law

- Rural farm School
- People’s Televisin Network, Inc.
- People’sSurvival Fund
- Aurora Pacific Economic Zone and Freeport Authority
- Girl Scout of the Philipines
- Philippine red Crss
- Ramon Magsaysay Award Foundation
- Philippine American Cultural Foundation
- International Rice Resesaarch Institute
- Task Force on Human Settlements
-Tubbataha Reefs natural park
- National Commmission for Culture and the Arts
- Philippine Normal University
- University of the Philippines
- National Water Quality management Fund
- Philippine Investors Commission
- National Social Action Council
- Aquaculture dep’t of the Southeast Asian
Fisheries Development Center
- Development Academy of the Philippines
- Integrated Bar of the Philippines

TRANSFER FOR LESS THAN ADEQUATE CONSIDERATION

- Deemed a gift subject to donor’s tax
- Sale, exchange or other transfer of property made in the ordinary course of business will be
considered as made for an adequate and full consideration in money or money’s worth
 VAT & OPT
1. Tax On Persons Exempt from VAT (NON- VAT under Sec 116)
Subject: Sale, lease of goods or properties, or performance of services
Rate & base: 3% of gross selling price or gross receipt
Requisites:
- Gross Annual sales/receipts do not exceed Php 3 million
- Must noit be a VAT registered taxpayer
Exempotion from 3% Non-VAT
- Self-employed individuals & professionals whose annual gross sales and other non-operating
income do not exceed Php 3 million and who opted 8% income tax option.
- Cooperatives

2. Common Carriers Tax: Domestic Carriers

Subject: - cars for rent or hire driven by a ledssee; transportation contractors on land; Other domestic
carriers by land for transport of passengers; keepers of garages
Rate and base: 3% of gross receipts
Rules:
Status GRAB/Partner
with CPC (fanchise) 3% CCT
without CPCT 12% VAT or 3% non-VAT

3. Common Carriers Tax: International Carriers

Subject: International air carriers and International shipping carriers during business in the Pilippines
Rate & base: 3% of gross receipts
Common carriers tax: 3% on outgoing for cargoes; excempt on passengers
VAT: exempt on passengers and cargoes

Gross Receipts- total amount of money or its equivalent representing the contract.. & other service
charges and fees received during the taxable quarter from cargo and/or mail, originating from the Phil.
...

4. Franchise tax
Subject: Franchise holders of: radio and/or television broadcasting companies with annual gross receipts
of the preceding year do not exceed Php 10 million (3%), gas and Water utilities (2%); and Outgoing calls
(Phil. To abroad) (10%)

- All other franchise holders shall pay the VAT.

5. Tax On Agents of foreign Insurance Company

Tax rate and base: 4% of the total premium collected; 5% on premiums paid- imposed on owners of
property who obtain insurance directly with foreign insurance companies.
 - Not applicable to reinsurance premiums.

6. Banks & Non-banks financial Intermediaries performing Quasibanking Functions

Tax Base: gross receipts derived from sources within the Philippines
Tax rates:
 Interests, commissions, and discounts (lending activities)
- Maturity pperiod is 5 years or less – 5%
- Maturity period is more than 5 years – 1%
 On dividends and equity shares in the net income of subsidiaries- 0%
 On royalties, rentals of property – 7%
 On net trading gains within the taxable year on foreign currency

7. Tax On Overseas dispatch, message or Conversation (Overseas Communication Tax)

Rate and Base: 10% 10% of the amount paid transmitted from the Philippines.
Shal not be applicable to: Government, Diplomatic services, International org. News services
Time for filing: within 20 days after the end of each quarter

8. Amusement Tax
Boxing Exhibitions – 10%
Professional basketball games – 15 %
Cockpits, cabarets, night and day clubs – 18%
Jai- alai and race tracks – 30%

Boxing exhibitions shall be exempt from amusement tax if;

- One of the contenders is a citizen of the Philipines
- Are romoted by citizens of the Phillippines or by a corporation or association at least 60% of the
capital of which is owned by such citizens.

9. Tax on Winnings
Subject: person who wins in horse races; owns a winning race horse based on the prize
Tax rate and base:
- Winner in horse races – 10%, but if from double, forecast bets- 4%
- Owner of winning horse – 10% of the prize
Filing and payment: within 20 days from the date the tax was deducted and withheld

10. stock Transaction Tax

Tax Base: gross selling price

1. On the sale, barter, exchange orother disposition of shares listed thru a local stock exchange – 6/10 of
1%
Filing & Payment- within 5 banking days from the date of collection

2. On the sale , barter... thru initial public offering:

- up to 25% - 4%
- Over 25% but not over 33 1/3- 2%
- Over 33 1/3% - 1%

a. Closely held corporation- corp. Atleast 50% in value of outstanding capital stock or of the toatal
combined voting power of all classes of stock is owned by or for not more than 20 individuals.

b. Initial public offering – public offering of dshares of stock made for the first time in the Local Stock
exchange

c. primary offering- original sale made to the investing public by the issuer corporation of its unissued
shares of stock

d. Secondary offering- offer for sale to the investing public by the existing shareholders of their
securities which is conducted during an IPO

e. Follow-on Follow-through offering of shares – refers to an offering of shares to the investing public
subsequent to IPO.

Filing and Payment:

- Primary Ofering: within 30 days from the date of listing of the shares of stock i the Local Stock
Exchange.
- Secondary Offering: within 5 banking days from the date of collection.

Filing of Return and Payment of Percentage Taxes

(except Amusement tax, Overseas Communication Tax, Tax on Winnings and Stock Transaction tax and
Intial Public Offerings tax)

Time for Filing and Payment:

Filing and payment should already be on a quarterly basis from the previous monthly filing and
remittance (within 25 days after the end of quarter) of the following:

a. VAT- exempt taxpayeers with annual gross sales/receipts not exceeding P 3M

b. Domestic carriers and keepers of garages
c. International air/shippping carriers
d. Franchisees of gas or water utilities
e. Franchisees of Radio and/or TV broadcasting companies with revenues not exceeding P 10M
f. Frnchise grantees sending overseas dispatch
g. Messages or conversations from the Philippines
h. Proprietors, lessees or operators of cockpits, night/day clubs, ... etc.
i. Banks, non-banks financial intermediaries with finance companies
j. Life insurance companies; and
k. Agent of foreign insurance companies

Place of Filing :
 - Separate return for each branch or place of business, or
- Consolidated return for all branches or places of business.

Short Period Return

Person who retires from business or whose resignation has been cancelled shall file quarterly
return and pay the ttax due thereon within 25 days from cessation or business operations or from the
date of cancellation of registration, as case may be.

ESTATE TAX
EXCLUSIONS FROM GROSS ESTATE
1. Proceeds of irrevocable life insurance policy payable and beneficiary that is not the state of the
deceased, his executor or administrator.
2. Proceeds of life insurance under a group insurance taken by employer (not taken out upon his
own life)
3. Insurance proceeds or other benefits from SSS, GSIS by reason of death.
4. Payments to legal heirs of deceased war veterans.
5. Amounts received from damages suffered during Worl war II
6. Benefits received from US Veterans Administration
7. The ff exempt transactons:
- The merger of the usufruct in the owner of the naked title.
- The transmission or delivery of the inheritance or legacy of the fiduciary heir or legatee to
the fideicommissary.
- The transmisson from the first heir, legatee or done in favor of another beneficiary in
accordance with the desire of the predecessor.
- All bequests, devisees, legacies or transfers to social welfare, cultural and charitable
institutions, no part of the net income of which inures to the benefit of any individual.
Provided, however that no more than 30% shall be used for administrative purposes.
8. The exclusive property of the surviving spouse.

TRANSFER FOR INADEQUATE CONSIDERATION

1. Applies on the ff. Transfers:
- Transfer in contemplation of death
- Revocable transfer
- Property passing under general power of appointment
2. The sale or exchange is exercised for an inadequate consideration in money or money’s worth
3. The difference between the FMV at the time of death and the value of consideration shall be
included in the gross estate.
 DEDUCTIONS FROM GROSS ESTATE

ORDINARY DEDUCTIONS

a. Expenses, losses, indebtedness, taxes, etc.

- Resident alien- deduct all expenses
- Nonresident alien- prorate expenses
I. Claims against the estate- may arise out of contract, tort, and operation of law; debts of demands of
pecuniary nature
Requisites:

- Personal obligation of the deceased existing at hte time of his death

- Contracted in good faith and for an adequate and full consideration in money or money’s worth
- The debt or claim is valid in law and enforceable in court
- The debt instrument was duly notarized
- Not condoned by the creditor or must not have prescribed
- If the loan was contracted within 3 years prior to the death of the decedent, the executor or
administrator shall submit a statement showing the disposition of the proceeds of the loan
II. Unpaid mortgage- the property left by the decedent which was encumbered by a mortgage
indebtedness still unpaid at the time of death
III. Claims agains insolvent persons- receivable of the decedent which can no longer be collected due to
the insolvency of the debtor.
Requisites:
- The amount of claim has been included in the gross estate
- The debtor’s incapacity is proven and not merely alleged.
IV. Unpaid Taxes- those which have accrued and unpaid as of decedents death.
NOT deductible:
- Income tax upon income received after death;
- property taxes not accrued before his death;
- estate tax due from the transmission if his estate
V. Losses
Requisites:
- Must arise from fire, shipwreck or other casualties after the debt of the decedent
- Not compensated by insurance or otherwise
- Not claimed as deduction for income tax purposes
- Incurred during the settlement of the estate and not later that the last day for the payment of
estate tax.

b. Transfers for public purposes- all bequests or transfers for the use of the government or any
political subdivision thereof for exclusively public purpose. Oral transfers are not deductible.
 c. Vanishing deductions – to minimize the effects of a double tax within a short period of time.
Requisites:
- Property is situated in Philippines
- Present decedent have acquired the property by inheritance or donation within 5 years prior to
his death
- Estate taxes must have been finally determined and paid
- The property must be identified as the one received from the prior decedent
- The estate of the prior decedent has not yet previously availed of the vanishing deductions

PERCENTAGES OF VANISHING DEDUCTIONS

Property Acquired
More than Not more than Percentage
xx 1 year 100%
1 year 2 years 80%
2 years 3 Years 60%
3 years 4 years 40%
4 years 5 years 20%
5 years xx 0%

SPECIAL DEDUCTIONS

1. Family Home- dwelling house where the members of the family reside; must be situated in the
Philippines.
Benefeciaries: spouses, ascendents and descendants; legally adopted children, brothers and
sisters; legitimate or illegitimate
Maximum amount deductible: Php 10M

2. Amount received by heirs Under RA 4917

3. Standard deduction- amount equivalent to Php 5M

VALUATION OF GROSS ESTATE

1. Valuation Date: appraised at its FMV at the time of death

2. Valuation of real property: whichever is higher between

- FMV determined by the Provincial or City Assessor (assessors value)
- FMV determined by the CIR (zonal value)

3. Valuation of shares of stocks, bonds or other securities

- traded in the stock exchange
- not traded in the stock exchange
 preferred shares – per value
 common shares – book value