estate tax and donors tax

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  • 7/24/2019 Estate Tax and Donors Tax

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    Estate Tax

    Is imposed on the right to transfer property by death. It is levied on the decedents estate

    and not on the heir receiving the property. The transfer of the net estate to every

    decedent, whether resident or non- resident of the Philippines, shall be subject to estate

    tax.

    Rates:

    Over But not Over The Tax Shall be Plus Of the Excess Over

    P 200,000.00 Exempt

    P 200,000.00 500,000.00 0 5 % P 200,000.00

    500,000.00 2,000,000.00 P 15,000.00 8 % 500,000.00

    2,000,000.00 5,000,000.00 135,000.00 11 % 2,000,000.00

    5,000,000.00 10,000,000.00 465,000.00 15 % 5,000,000.00

    10,000,000.00 1,215,000.00 20 % 10,000,000.00

    Application

    RC NRC RA NRA

    Within and without within within and without withinReal property Real property Real Property Real Property

    Personal property Personal property Personal property Personal propertyIntangible Intangible Intangible Intangible(if no

    reciprocity)(if there is reciprocity, exclude

    Estate Tax of Citizen or Resident Alien

    For estate tax purpose, the gross estate of citizens (a resident or nonresident) and resident

    aliens at the time of death shall include all the property of the decedent, real or personal,

    tangible or intangible, wherever situated but excluding the exclusive property of the

    surviving spouse.

    Likewise, all legal claims and allowable deductions against the estate shall reduce the

    amount of the estate to arrive at the net taxable estate.

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    Estate Tax of Nonresident Alien

    For estate tax computation, only the properties of a nonresident decedent situated in the

    Philippines are subject to Philippine estate tax. The deduction allowed shall be applied

    proportionately in relation to Philippine gross estate.

    The determination of the gross estate of nonresident alien will depend whether there is

    reciprocity or not. If there is reciprocity, intangible assets are excluded for estate tax

    purposes.

    TAX CREDIT FOR ESTATE TAX PAID TO A FOREIGN COUNTRY

    The amount of estate taxes paid to a foreign country could be claimed as credit against

    estate tax in the Philippines, if such taxes pertain to properties which are included in the

    gross estate for Philippine estate tax computation.

    Generally, there is an application of tax credit if the estate of a citizen or resident

    decedent paid estate taxes for properties located outside the Philippines.

    Notice of Death

    The notice of death is required if the

    a. gross transfer is subject to estate tax, or

    b. gross estate exceeds P20,000

    The filing notice of death shall be made within 2 months after the decedents death.

    Deductions from the value of the estate

    1. Standard deduction of P1,000,000given without any substantiation

    2. Family Home P1,000,000 - limit

    3. Medical expenses P500,000limit

    4. Funeral expenses (5% of GE but not to exceed P200,000)

    5. Claims against the estate

    6.

    Share of surviving spouse

    7. Exclusive property of the surviving spouse

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    Filing and payment of Estate Tax

    The following rules shall be observed for the filing of estate tax return and payment of

    estate tax due:

    1. A estate tax return is to be filed if the gross estate exceeds P200, 000.

    2. The estate tax return showing a gross value exceeding two million pesos (P2, 000, 000)

    shall be supported with a statement duly certified by a Certified Public Accountant.

    3. For purposes of determining the estate tax, the estate tax return shall be filed within six

    (6) months from the decedents death.

    4. In meritorious cases, a reasonable extension for filing the return, not exceeding 30 days

    shall be granted by the BIR Commissioner or any authorized Revenue Officer.

    5. As a general rule, the executor, administrator or the heirs shall pay the estate tax

    imposed under the Code at the time the return is filed.

    6. By reason of undue hardship upon the state or any of the heirs, the BIR Commissioner

    may extend the time for payment of such tax or any part thereof not to exceed five (5)

    year in case the estate is settled through the courts, or two (2) years in case the estate is

    settled extrajudicially.

    7. Where the request for extension is by reason of negligence, intentional disregard of

    rules and regulations, or fraud on the par to the taxpayer, the Commissioner will grant no

    extention.

    8. Any amount paid after the statutory due date of the tax, but within the extension periodshall be subject to interest but not to surcharge.

    Payment of Estate Tax by Installment

    In case the available cash of the estate is not sufficient to pay its total estate tax liability,

    the estate may be allowed to pay the tax by installment, provided that:

    1. A clearance shall be released only with respect to the property the corresponding

    /computed tax on which has been paid.

    2. Any amount paid after statutory due date of the tax shall be imposed the corresponding

    applicable penalty thereto.

    3. However, if the Commissioner or his duly authorized representative approves the

    payment of the tax after the due date, the imposable penalty thereon shall only be interest.

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    4. The Commissioner may enforce action against the estate after the due date of the estate

    tax provided that all the applicable laws and required procedures are followed/observed.

    Liability for Payment of Estate Tax

    Below are persons liable for the payment of estate tax.

    1. The executor or administrator of an estate has the primary obligation but the heir or

    beneficiary has subsidiary liability to pay the estate tax.

    The extent of the heir or beneficiarys liability, however, shall in no case exceed the

    value of his share in the inheritance.

    2. Where there are two or more executors or administrators, all of them are severally

    liable for the payment of the estate tax.

    3. The executor or administrator before the delivery of the distributive share in the

    inheritance to any heir or beneficiary shall pay the estate tax imposed under the Code.

    Surcharges, Interest and Penalties

    In the event of violation of the law, criminal penalties and civil liabilities (surcharges,

    advalorem penalties, and interest) are imposed.

    Safeguards for the Payment of Estate Taxes

    Aside from the provisions on interest, surcharges and penalties as effective safeguards to

    encourage the payment of estate tax, the following measures should be observed:

    1. The executor or administrator should not distribute the estate until the taxes are paid;

    2. The Register of Deeds shall not register any deed or instrument covering the

    decedents estate or any portion thereof until the taxes are shown to have been paid;

    3. No corporation shall register in its books transfer of shares or bonds forming part of

    the decedents estate until thetaxes are paid;

    4. A debtor of the decedent cannot be required to pay debts to the heirs but may pay the

    debts to the executor or administrator; and

    5. Every notary public who intervened as such in any instrument affecting the estate or

    part thereof must furnish copy of said instrument to the Commissioner of Internal

    Revenue.

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    The Register of Deeds have two duties in Section 95 of the new Internal Revenue Code,

    namely:

    1. Not to register any document covering portions of the estate where no taxes have been

    paid; and

    2. To notify the BIR Commissioner of the non-payment of the taxes.

    Lawyers, notaries, etc. must not only furnish the BIR Commissioner copies of the

    document but also such information which may facilitate the payment of the tax.

    NET DISTRIBUTABLE ESTATE

    The net distributable estate is the actual portion of the estate which shall be inherited by

    the heirs or beneficiaries. It is computed by considering the realizable value of the gross

    state reduced by the amount of actual deductions which will diminish the estate.

    Exercises

    1. A citizen of the Philippines died with gross estate of 3,000,000. The amount

    claimed as deductions amounted to 1,180,000 which includes standard deduction

    and actual funeral expenses. How much is the net estate?

    2. The estate of Fe Mann after deduction is P1,200,000. Actual funeral expenses

    deducted from the estate was 150,000 and other actual deductible expenses is

    50,000. How much is the net estate is she is a resident alien?

    3. Pedro died in November 2006, he left the following:

    a. Exclusive real estate P2,800,000

    b. Conjugal real estatefamily home 1,600,000

    c.

    Conjugal personal property 800,000

    During the marriage, the Pedro and his wife borrowed P400,000 from PNB which

    at the time of death had a balance of P300,000. Funeral expenses is P245,000

    while judicial expenses is P100,000. Compute for the net estate and the estate tax

    due

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    DONORS TAX

    NATURE OF DONATION

    Donation is an act of gratuitously transferring property or rights motivated by the

    liberality of the giver (donor) in favor of the receiver (donee) who accepts it.

    A donation is a gifta voluntary transfer of property or right from one person to another

    for free.

    The transfer of property or rights includes not only the transfer of ownership or title but

    also the passage of control over the economic benefits of the property.

    Rates

    Net Gift Over But not Over The Tax Shall be Plus Of the Excess Over

    100,000.00 exempt

    100,000.00 200,000.00 0 2% 100,000.00

    200,000.00 500,000.00 P 2,000.00 4% 200,000.00

    500,000.00 1,000,000.00 14,000.00 6% 500,000.00

    1,000,000.00 3,000,000.00 44,000.00 8% 1,000,000.00

    3,000,000.00 5,000,000.00 204,000.00 10% 3,000,000.00

    5,000,000.00 10,000,000.00 404,000.00 12% 5,000,000.00

    10,000,000.00 and over 1,004,000.00 15% 10,000,000.00

    Application

    RC NRC RA NRA

    Within and w/o Within and w/o within and w/o within only

    Real/Personal Real/personal RPI RPI

    Intangible (RPI) Intangible

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    KINDS OF DONATION

    Donation may be classified as (a) donation mortis causaand (b) donation inter vivos.

    Donation Mortis Causa

    This donation takes effect upon the death of the donor. It is governed by the formalities

    of testamentary disposition which shall be observed based on the law of succession, and

    to be imposed with estate tax.

    Characteristics of Donation Mortis Causa

    The characteristics of a donation mortis causaare:

    1. The transferor retains the ownership (full or naked) and control of the property before

    his death;

    2. The transfer is revocable by the transferor at will, or the donor reserved the power to

    dispose of the properties conveyed; and

    3. The transfer should be void if the transferor should outlive the transferee.

    Donation Inter Vivos

    This donation is a gratuitous transfer of rights and property that shall take effect during

    the lifetime of the donor. This transfer is subject to donors tax.

    ESSENTIALS OF DONATION

    In order that a donation will be valid, the following elements must be present:

    1. Capacity of the donor2. Donative Intent

    3. Delivery of the gift

    4. Acceptance of the donee

    Capacity of the Donor

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    A donor is a natural or judicial person who owns the property or right being donated.

    The term capacity if donor refers to the condition and legal capacity of the donor to

    enter into a valid contract.

    A donor must be capacitated to make a valid donation. The donee (the person to whom

    property or right is given for free) need not be capacitated to receive the gift to make the

    donation valid.

    It is enough that the duly authorized representative of the incapacitated donee received

    the donation.

    Donative Intent

    Donative intentrefers to the proper declaration of the legal owner of a property or right to

    transfer ownership to another without consideration. Such intent followed by a donativeact is essential to constitute a gift especially in cases of direct donation.

    The intention to donate is known by observing the forms required by law to make it valid.

    Required Forms to Effect Donation

    The following forms must be observed to effect a valid donation:

    1. VeballyWhere the value of the personal property (movable property) donated is 5,

    000 or less, the donation can be made orally.

    An oral donation requires simultaneous delivery of the thing or the document

    representing the right donated.

    2. In WritingWhere the value of the personal property donated exceeds P5, 000, the

    donation and the acceptance shall be made in writing, otherwise the donation shall be

    avoid.

    3. In Public InstrumentIn order that a donation of real property (immovable property)

    shall be valid, it must be made in a public document (deed of donation), specifying

    therein the property donated.

    A donation of immovable property that does not comply with the formalities required in

    Article 749 of the Civil Code of the Philippines shall be deemed void ab initio or

    inexistent. Hence, form is an essential legal requirement.

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    When Donative Intent Not Necessary

    Donative intent is required only in a direct gift. But if a gift is indirect taking place by

    way of sale, exchange or other transfer of property as contemplated in section 100 of the

    Tax Code (transfer for inadequate consideration), donative intent is not necessary.

    Delivery of the Gift

    The object of donation could be a real property, personal property or even rights. The

    delivery of the object of donation may be actual or constructive. The delivery may be

    made to a trustee.

    The completion of a gift requires physical delivery of the subject matter of the gift or, if

    physical delivery of the subject matter is not possible, delivery of the instrument of

    assignment or deed.

    As a rule, the donors tax does not apply unless and until there is a completed gift,

    whereby the donor does not reserve or retains power over the gift.

    A gift that is incomplete due to reserved powers becomes complete when either:

    1. The donor renounces the power; or

    2. His right to exercise ceases because of the happening of some event or contingency or

    the fulfillment of some condition, other than because of donors death.

    An incomplete gift in trust also becomes complete to the extent that payments are

    actually made to the beneficiaries.

    A donation is not incomplete merely because the donees identity cannot be ascertained

    at the time of the transfer.

    ACCEPTANCE OF THE DONEE

    Acceptance is the acknowledgement of the thing or right donated.

    The transfer of property by gift is perfected from the moment the donor knows of the

    acceptance by the donee; it is completed by the delivery, either actually or constructively

    of the donated property to the donee.

    The donee must accept the donation personally, or through an authorized person with a

    special power for that purpose; or with a general and sufficient power; otherwise, the

    donation shall be void.

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    The acceptance of the donation may be made by the donee in the same deed of donation

    or in a separate public document. Such acceptance must be done during the lifetime of the

    donor.

    If the acceptance is made in a separate document, the donor shall be notified of such

    acceptance in authentic form. This shall be noted in both instruments.

    Donations made to conceive and unborn children may be accepted by those persons who

    would legally represent them.

    Minors and others who cannot enter into a contract may become donees but acceptance

    shall be done through their parents or legal representatives.

    Cancellation of Indebtedness

    Condonation or remission of debt where the debtor did not render service in favor of thecreditor is a donation.

    There is no donation in the following cases:

    a. If the cancellation of indebtedness is due to the rendition of service, the transaction has

    the effect of payment of compensation. Hence, the debtor earned income which is subject

    to income tax.

    b. If a corporation forgives the debt of its stakeholder, the transaction has the effect of

    payment of dividend.

    Renunciation of Inheritance

    General renunciation by an heir, including the surviving spouse, of his/her share in the

    hereditary estate left by the decedent is not subject to donors tax.

    If the renunciation is specifically and categorically done in favor of identified heir(s) to

    the exclusion or disadvantage of the other co-heirs in the hereditary estate, such

    renunciation is subject to donors tax.

    Compromises on Will Disputes

    Compromises and settlements of will contests and other disputes are not gifts. However,

    payments made to a dissatisfied heir who has no legally enforceable rights may constitute

    donation.

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    Beneficiaries of Trust

    Where a gift is made to a trustee for the benefit of one or more beneficiaries, the

    beneficiaries, and not the trustee, are the donees of the gift.

    The transfer of a bare legal title to a trustee is not, by itself, a gift. Hence, a transfer from

    one trust to another is not a gift if the beneficiaries of the two trusts are the same.

    Corporations Shares of Stock

    A donation by a foreign corporation of its own shares of stock to resident employees is

    not subject to the gift tax but if the donation was given in consideration of the letters

    services the value of the shares can constitute taxable income.

    Court Ordered Payments

    Court ordered transfers generally are not gifts.These include payment in which a party is

    held to be obliged to make for goods or services received or damages for breach of

    contract or for torts.

    However, court-ordered payments out of the estate of an incompetent or a minor for the

    benefit of relatives whom the incompetent or minor is not legally obligated to support

    have been held to be gifts.

    GROSS GIFT

    The determination of gross gift is the first procedure in the computation of the donors

    tax. The value of property or right donated subject to donors tax before any deduction is

    a gross gift.

    Whether a donation is included or not as part of the gross gift, such shall depend on the

    classification of the donor and the kind of property or right being donated.

    Classifications of Donor

    The donor or the donee may be a natural or juridical person. A taxable donor need not be

    a natural person.

    It is important to determine the classifications of donors to ascertain whether the property

    donated is subject to tax in the Philippines. The donor may be classified as:

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    1. Citizen or Resident Alien at the date of donation, the donor is a citizen of the

    Philippines or a resident of the Philippines.

    The citizen or resident donor (as well as domestic corporation) is subject to donors tax

    regardless of where the gift was made or where the property donated is located, subject to

    the rule of tax credit.

    2. Nonresident Alien at the date of donation, the donor is a foreigner and is not a

    resident of the Philippines.

    Nonresident aliens (whether or not doing business in the Philippines) would be subject to

    donors tax only on their donations of property located in the Philippines.

    The Rule of Reciprocity

    For purposes of donors tax, the rule of reciprocity is applicable only to intangible

    personal property with situs within the Philippines owned by a nonresident alien.

    There is reciprocity when the following situations exist:

    1. A foreign country, of which the donor is a citizen and resident at the time of the gift,

    did not impose a donors tax.

    2. When the foreign country allowed similar exemption from transfer tax with respect to

    the itangible personal properly owned by a Filipino citizen not residing within the said

    foreign country.

    Conjugal Donation

    Husband and wife cannot transfer by virtue of sale or donation any conjugal or

    community property without the consent of the other, except in cases where there is

    moderate donations for charity or on the occasion of family rejoicing or family distress.

    Spouses who make donation out of conjugal property shall be considered a separate

    donor of his or her interest in the conjugal property.

    Hence, one-half of the conjugal property shall be considered donation of the husband and

    the other half a donation of the wife. Unless the wife expressly joins in making the

    donation, it shall be deemed to have been made by the husband alone.

    Effect of Donations between Husband and Wife

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    Donations made between husband and wife during the marriage are voidand, therefore,

    not subject to donors tax. This provision is also applicable to man and woman living

    together as husband and wife without valid marriage.

    However, donation mortis causa between husband and wife is a valid transfer of property

    subject to estate tax. Likewise, a moderate gift between the spouses on the occasion ofany family rejoicing is a valid transfer.

    VALUATION OF DONATION

    In general, the principles in determining the value of properties in estate taxation are also

    applicable in determining the value of properties given or received in donations. The

    value shall be that existing at the time when the gift is made.

    Specially, the following valuations shall be observed:

    1. Cash giftsshall be valued at the face amount of the currency.

    2. If the gift is apersonal property, the fair market value thereof is considered the amount

    of the gift.

    3. If the gift is a real property, the current and fair market value as shown in the schedule

    of values fixed by the Provincial and City Assessors or the fair market value as

    determined by the BIR Commissioner, whichever is higher.

    Transfer for Inadequate Consideration

    A transaction may pass as a sale or exchange but if there is a comparative disparity in

    consideration, the difference is deemed a gift.

    In general, where property other than real property is transferred inadequate

    consideration, the amount in excess of the propertys fair market value or the

    consideration shall be deemed a gift.

    The excess shall be included in computing the amount of the gifts made during thecalendar year, except in the sale of real property or capital asset which has been subjected

    to final tax.

    This is because the transfer tax on sale of real asset or capital asset subjected to final tax

    are generally valued at their selling price or fair market value (zonal value), whichever is

    higher.

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    Net Gift

    Net gift shall mean the net economic benefit from the transfer that accrues to the donee.

    If a mortgaged property is transferred as a gift but imposing upon the donee theobligation to pay the mortgage liability, the net gift is measured by deducting the amount

    of the mortgage assumed from the fair market value of the property.

    DEDUCTIONS FROM GROSS GIFTS

    Deductions from gross gifts are items to be subtracted from the gross value of property

    donated to arrive at the value of net taxable gift. The net taxable gift is the basis in the

    computation of the donors tax.

    The following items are allowed by the law to be deducted from the gross gift:

    1. Dowries;

    2. Encumbrance assumed by the donee;

    3. Diminution of gift provided by the donor;

    4. Donations to the national government, and the like; and

    5. Donation to non-profit organizations.

    Dowries

    A gift to the children of conjugal property is a single gift by the any of the parents unless,

    by common agreement, the gift is made by both parents.

    In which case each spouse is considered a donor of his or her interest in the property and

    therefore, each of the spouse can claim a separate exemption in case of their childs

    marriage.

    The law allows gifts given by natural or adopting parents on account of marriage of their

    legitimate, recognized natural or adopted children a deduction of P10, 000 provided that

    the giving of the gift is made before the celebration of marriage or within one year

    thereafter.

    Encumbrance Assumed by the Donee

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    An encumbrance is a claim or liability attached to a property. Examples of encumbrance

    are mortgage, security interest, costs of rights, accrued and unpaid taxes.

    The law allows an encumbrance as a deduction from the gross gift if assumed by the

    donee.

    Diminution of Gift Provided by the Donor

    Diminution of gift refers to the decrease in the value of property donated as a result of a

    condition made by the donor to the donee.

    Donations to the National Government

    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 thereof shall

    be exempt from donors tax.

    Donation to NonProfit Organization

    Donations to non-profit organizations such as educational, charitable, religious, cultural,

    social welfare, accredited NGOs, trust/philantrophic organizations or research institutions

    are allowed by the law as exemption provided that not more than thirty percent (30%) of

    the said donation shall be used for administrative purposes.

    Destroyed Donations

    The donors tax accrues upon the completion if a gift. If the donated property was

    destroyed after the delivery, the donor is still liable to pay the related donors tax.

    The law merely suspends the payment of tax but such does not eliminates the tax liability

    of the donor because the donation has been made before the destruction of the thing

    donated.

    Tax Exempt Donations

    Donors tax is not imposable and/or collectible on gifts made by residents and

    nonresidents in the following cases:

    1. The first P100, 000 of the net gift for every year is not subject to donors tax.

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    2. Under special laws, donations given to the following organizations are exempt from

    donors tax:

    a. Ramon Magsaysay Award Foundation

    b. Philippine Inventors Commission

    c. Philippine-American Cultural Foundation

    d. International Rice Research Institute

    e. Integrated Bar of the Philippines;

    f. Development Academy of the Philippines;

    g. National Museum, National Library, and the archives of the National Historical

    Institute;

    h. National Social Action Council;

    i. Southern Philippines Development Administration;

    j. Task Force on Human Settlement;

    k. Intramuros Administration;

    l. Irrevocable donations of American-owned private lands acquired under the Laurel-

    Langley Agreement in favor 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, or any charitable or scientific organization with a nationwide scope of

    activities and widely recognized as such as the Philippine National Red Cross,

    Community Chest, Boy Scouts of the Philippines, and the Philippine Heart Foundation;

    m. Aqua-culture department of the Southeast Asian Fisheries Development Center of the

    Philippines;

    n. Museum of Philippine Costumes;

    o. Donations of foreign origin to international civic organizations, or institutions for

    civic, religious or charitable purposes; and

    p. Gratuitous transfer by a religious corporation to its local branch.

    A gift to a parish priest or his Church is not exemptfrom gift tax. The exemption under

    the Constitution refers to exemption from property tax or realty tax. A gift is not a

    property tax but an excise tax imposed on the transfer of property by way of gift inter

    vivos.

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    The above exemptions are confined to the gift tax. Accordingly, if the donated property

    comes from abroad, the importation could be subjected to VAT or duties.

    THE DONORS TAX

    The donors tax is not a property tax, but one which is imposed on the transfer of

    property by way of gift intervivos.

    The donors tax shall not apply unless and until there is a completed gift.

    The law in force at the time of the perfection/completion of the donation shall govern the

    imposition of the donors tax.

    TAX CREDITS (Donors Taxes Paid to Foreign Country)

    In general, the tax imposed upon a donor who is a citizen or a resident at the time of

    donation shall be credited with the amount of any donors tax of any character and

    description imposed by the authority of a foreign country subject to tax credit limitation.

    Filing of returns and Payment of tax

    The law provides that any person who makes any transfer by gift, except those who are

    exempted from donors tax provided for in the Tax Code 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

    the law.

    Donations that are exempt from donors tax are not required to file the returns except if

    the exemption amounts only to a partial exemption.

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    The donee, not being taxable, is not required to file any return unless he acts as an agent

    of the donor.

    Donors tax is payable upon the filing of the return.

    The filing of returns for donors tax is within 30 days after the date the gift is made and

    the tax due thereon must be paid on the date of filing.

    The tax shall be paid at the same time when the return is filed unless the Commissioner

    gives an extension, not to exceed six months.

    The filing of returns for donors tax is with the Revenue District Office, or duly

    authorized collection agent in which the donor resided at the time of transfer. If there is

    no legal residence in the Philippines, filing should be made with the Office of the

    Commissioner of Internal Revenue.

    Attachments to the Donors Tax Return

    Based on the BIR Form 1800, the following documents shall be attached to the donors

    tax return:

    1. Sworn statement of the relationship of the donor to the donee;

    2. Proof of claimed tax credit, if applicable;

    3. Certified true copy (copies) of the Original/Transfer/Condominium Certificate of Title(front and back pages) of the donated property, if applicable;

    4. Certified true copy (copies) of the latest Tax Declaration (front and back pages) of lot

    and/or improvement, if applicable;

    5. Certified of No Improvement issued by the Assessors Office where the donated real

    property/ies have not declared improvements, if applicable;

    6. Proof of valuation of shares of stocks at the time of donation, if applicable;

    a. For listed stocksnewspaper clippings/ certification issued by the Stocks Exchange as

    to the value of per share.

    Exercises:

    1. A gave to B a diamond ring worth P50,000.00, B received the ring thru a courier

    but forgot to inform A about her acceptance. A month later, B informed A of her

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    19/19

    acceptance of the ring, which, during that date, is valued at P55,000.00. How

    much is the value of the ring for purposes of payment of the donors tax?

    2. A is a Chinese residing in Hongkong and gave the following gifts to his daughter

    in the Philippines

    a. Motor vehicle P150,000

    b. Shares of stocks in the Phils. 100,000

    c. Franchise in the Phils 150,000

    d. Patent in Hongkong 200,000e. Time deposit in Hongkong 500,000

    How much is the taxable gross gifts?