There are two types of donation namely; Donation Inter-vivos and Donation Mortis-causa. The latter is a type of donation that take effect during the lifetime of the donor and thus, subject to donor’s tax. The former type is subject to estate tax.

National Internal revenue Code (NIRC) or RA 8424, as amended, is the law governing the donor’s taxation in the Philippines

Donor’s tax is an ad valorem tax and also an excise tax.

The donor’s tax shall not apply unless and until there is a competed gift.It is completed by the delivery, either actually or constructively, of the donated property to the done.

1. Donation Mortis causa: refers to gifts made during lifetime of donor but is intended by donor to take effect upon his death. This property transfer partakes the nature of testamentary disposition and is governed by law on succession; hence this property is subject to estate tax.

Requisites of Valid Donation are:

1. Donative intent of donor.

2. Capacity or authority of donee

3. Delivery of donated property

4. Acceptance of Donee

5. Donation is in prescribed forms

To be a valid Donation; for personal property- if value of property is equal or more than P 5,000 then donation and acceptance must be in writing; otherwise, the donation and acceptance may be made orally.

Donor's tax is not a property tax and collected by LGUs.

Imposition of donor tax is under Sec 109 of the tax code.

The return of the donor required in this Section shall be filed within ten (10) 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.

BIR Form 2550 is used for Donor’s Tax Return.

Contents of Donors tax return:

· Each gift made during the calendar year which is to be included in computing the net gifts

· The deductions claimed and allowable

· Any previous net gift made during the past years of donation since birth.

· The name of Donee

· Relationship of donor and one

· Such further information required by rules and regulations made pursuant to law.

In 2017, interest rate for late payment of taxes is 12%.

A, an American Citizen living in JAPAN, donated a property located in ITALY worth 10M in year 2018 to B. Who is liable to pay donor' s tax?

Under the OLD tax code, 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

X, donated 1M to Y in 2018. Y is X's best friend since high school. What is the donor's tax due?

Under TRAIN law, Dowries or gift on account of marriage and before celebration of marriage or within one year thereafter by parents to each of their legitimate, recognized natural or adopted children is exempted up to the extent of first P 10,000.

Who is subject to reciprocity?