Ballares, Shellamay

Cooper, Katrina Elisa

Castro, Leizel Kimberly Joy
Hugo, Willa Ezra
CHAPTER 8: Donors Tax

Diminution of Gift Provided by the Donor

- It refers to the decrease in the value of property donated as a result of a condition made
by the donor to the donee to give a portion of the donated property to another person.

Donations to the National Government

- Gifts made 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 Non-Profit Organizations

These are exempt from donors tax:
1. Educational;
2. Charitable;
3. Religious;
4. Cultural;
5. Social welfare;
6. Accredited non-government organization;
7. Trust or philanthropic organization; or
8. Research institutions.

Requisites for Donors tax exemption.

- The donee organization:
1. Must be an accredited non-stock and non-profit organization;
2. Shall not use more than thirty percent (30%) of the gifts received for administrative
purposes;
3. Governed by trustees with no compensation
4. Does not pay dividends; and
5. Devotes all of its revenue to the accomplishment and promotion of its purposes
enumerated in its Articles of Incorporation.

DONORS TAX CREDITS

To counter-act double taxation, the donors tax paid by a Filipino citizen or resident donor is
creditable against the Total Philippine donors due using the following tax treatment:
1. Creditable in full amount, if the donors tax was paid to the Philippine Government; and
2. Creditable subject to limit, if paid to foreign country.
Limit on Foreign Donors Tax Credit
1. One foreign country donors tax credit limit:
Net gifts on e foreigncountry '
= Total net gifts withinwithout x Philippine dono r stax due

Or

The actual estate tax paid foreign country , whichever is lower .

2. Several foreign countries donors tax credit limit:

Total foreignnet gifts '

x Philippine dono r stax due
Total net gifts withinwithout

The allowable tax credit will be the lowest of the following:

a. Actual donors tax paid to foreign country; or
b. Lower of actual or limit donors tax credit per foreign country donation; or
c. Lower of actual or limit donors tax credit of total foreign country donations.

Filling and Payment of Donors 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.
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.

Attachments to the Donors Tax Return

Based on the BIR Form 1800:
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
(from 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. Certificate 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 stock at the time of donation, if applicable;
a. For listed stocks newspaper clippings/ certification issued by the Stock Exchange
as tot the value of per share
 b. For unlisted stocks latest audited Financial Statements of the issuing corporation
with computation of the book value per share
7. Proof of valuation of other type of personal properties, if applicable;
8. Proof of claimed deductions, if applicable; and
9. Proof of the Tax Debit Memo used as payment, if applicable.
These requirements must be submitted upon audit of the tax case before the Tax Clearance
Certificate/ Certificate Authorizing Registration can be released to the taxpayer.

Penalties
- A violation of the law or regulations duly promulgated under authority of law subjects the
offender to both civil and criminal liabilities.
Surcharge 25% - it is important if no return is filed within the prescribed time except
that when the return is subsequently filed by the taxpayer.
Surcharge 50% - is imposed in case of the following instances:
1. Willful neglect to file the return within the period prescribed by the Code or by rules
and regulations; or
2. The return filed is false or fraudulent.
Interest at the rate of twenty percent (20%) per annum shall be imposed on the basic
unpaid amount of tax from the date prescribed for the payment until the amount is fully
paid.