TITLE III

ESTATE AND DONOR'S TAXES

CHAPTER II - DONOR'S TAX

SEC. 98. Imposition of Tax. -

(A) There shall be levied, assessed, collected and paid upon the transfer by any person, resident
or nonresident, of the property by gift, a tax, computed as provided in Section 99.
(B) The tax shall apply hether the transfer is in trust or otherise, hether the gift is direct or
indirect, and hether the property is real or personal, tangible or intangible.

SEC. 99. Rates of Tax Paa!"e ! Dono#. -

$A% In &ene#a". ! The tax for each calendar year shall be computed on the basis of the total net gifts
made during the calendar year in accordance ith the folloing schedule"
#f the net gift is"

$ver

But %ot $ver The Tax Shall be


&lus $f the 'xcess
$ver
& ()),))) 'xempt
& ()),))) *)),))) ) *+ &()),)))
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,)),))) (,))),))) (-,))) .+ ,)),)))
(,))),))) /,))),))) --,))) 0+ (,))),)))
/,))),))) ,,))),))) *)-,))) ()+ /,))),)))
,,))),))) (),))),))) -)-,))) (*+ ,,))),)))
(),))),))) (,))-,))) (,+ (),))),)))


$'% Tax Paa!"e ! Dono# if Donee is a St#an(e#. ! 1hen the donee or beneficiary is stranger, the tax
payable by the donor shall be thirty percent (/)+) of the net gifts. 2or the purpose of this tax, a 3stranger,3
is a person ho is not a"
(() Brother, sister (hether by hole or half!blood), spouse, ancestor and lineal descendant4 or
(*) 5elative by consanguinity in the collateral line ithin the fourth degree of relationship.

$C% Any contribution in cash or in 6ind to any candidate, political party or coalition of parties for campaign
purposes shall be governed by the 'lection 7ode, as amended.



SEC. )**. T#ansfe# fo# Less T+an A,e-.ate an, f."" Consi,e#ation. ! 1here property, other than real
property referred to in Section *-(8), is transferred for less than an ade9uate and full consideration in
money or money3s orth, then the amount by hich the fair mar6et value of the property exceeded the
value of the consideration shall, for the purpose of the tax imposed by this 7hapter, be deemed a gift, and
shall be included in computing the amount of gifts made during the calendar year.

SEC. )*). Exemption of Ce#tain &ifts. ! The folloing gifts or donations shall be exempt from the tax
provided for in this 7hapter"

$A% In t+e Case of &ifts /a,e ! a Resi,ent. -
(() 8ories or gifts made on account of marriage and before its celebration or ithin one
year thereafter by parents to each of their legitimate, recogni:ed natural, or adopted
children to the extent of the first Ten thousand pesos (&(),))))"
(*) ;ifts made to or for the use of the %ational ;overnment or any entity created by any
of its agencies hich is not conducted for profit, or to any political subdivision of the said
;overnment4 and

(/) ;ifts in favor of an educational and<or charitable, religious, cultural or social elfare
corporation, institution, accredited nongovernment organi:ation, trust or philanthrophic
organi:ation or research institution or organi:ation" &rovided, hoever, That not more
than thirty percent (/)+) of said gifts shall be used by such donee for administration
purposes. 2or the purpose of the exemption, a 3non!profit educational and<or charitable
corporation, institution, accredited nongovernment organi:ation, trust or philanthrophic
organi:ation and<or research institution or organi:ation3 is a school, college or university
and<or charitable corporation, accredited nongovernment organi:ation, trust or
philanthrophic organi:ation and<or research institution or organi:ation, incorporated as a
nonstoc6 entity, paying no dividends, governed by trustees ho receive no
compensation, and devoting all its income, hether students3 fees or gifts, donation,
subsidies or other forms of philanthrophy, to the accomplishment and promotion of the
purposes enumerated in its Articles of #ncorporation.

$'% In t+e Case of &ifts /a,e ! a Non#esi,ent not a Citi0en of t+e P+i"ippines. !
(() ;ifts made to or for the use of the %ational ;overnment or any entity created by any
of its agencies hich is not conducted for profit, or to any political subdivision of the said
;overnment.
(*) ;ifts in favor of an educational and<or charitable, religious, cultural or social elfare
corporation, institution, foundation, trust or philanthrophic organi:ation or research
institution or organi:ation" &rovided, hoever, That not more than thirty percent (/)+ of
said gifts shall be used by such donee for administration purposes.

$C% Tax C#e,it fo# Dono#'s Taxes Pai, to a 1o#ei(n Co.nt#. -
$)% In &ene#a". ! The tax imposed by this Title upon a donor ho as a citi:en or a
resident at the time of donation shall be credited ith the amount of any donor3s tax of
any character and description imposed by the authority of a foreign country.

$2% Limitations on C#e,it. ! The amount of the credit ta6en under this Section shall be
sub=ect to each of the folloing limitations"

(a) The amount of the credit in respect to the tax paid to any country shall not
exceed the same proportion of the tax against hich such credit is ta6en, hich
the net gifts situated ithin such country taxable under this Title bears to his
entire net gifts4 and
(b) The total amount of the credit shall not exceed the same proportion of the tax
against hich such credit is ta6en, hich the donor3s net gifts situated outside the
&hilippines taxable under this title bears to his entire net gifts.

SEC. )*2. 3a".ation of &ifts /a,e in P#ope#t. ! #f the gift is made in property, the fair mar6et value
thereof at the time of the gift shall be considered the amount of the gift. #n case of real property, the
provisions of Section 00(B) shall apply to the valuation thereof.

SEC. )*4. 1i"in( of Ret.#n an, Pament of Tax. -

$A% Re-.i#ements. ! any individual ho ma6es any transfer by gift (except those hich, under
Section ()(, are exempt from the tax provided for in this 7hapter) shall, for the purpose of the
said tax, ma6e a return under oath in duplicate. The return shall se forth"
(() 'ach gift made during the calendar year hich is to be included in computing net
gifts4
(*) The deductions claimed and alloable4
(/) Any previous net gifts made during the same calendar year4
(-) The name of the donee4 and
(,) Such further information as may be re9uired by rules and regulations made pursuant
to la.

$'% Time an, P"a5e of 1i"in( an, Pament. ! The return of the donor re9uired in this Section
shall be filed ithin thirty (/)) days after the date the gift is made and the tax due thereon shall be
paid at the time of filing. 'xcept in cases here the 7ommissioner otherise permits, the return
shall be filed and the tax paid to an authori:ed agent ban6, the 5evenue 8istrict $fficer, 5evenue
7ollection $fficer or duly authori:ed Treasurer of the city or municipality here the donor as
domiciled at the time of the transfer, or if there be no legal residence in the &hilippines, ith the
$ffice of the 7ommissioner. #n the case of gifts made by a nonresident, the return may be filed
ith the &hilippine 'mbassy or 7onsulate in the country here he is domiciled at the time of the
transfer, or directly ith the $ffice of the 7ommissioner.

SEC. )*6. Definitions. ! 2or purposes of this Title, the terms 3gross estate3 and 3gifts3 include real and
personal property, hether tangible or intangible, or mixed, herever situated" &rovided, hoever, That
here the decedent or donor as a nonresident alien at the time of his death or donation, as the case
may be, his real and personal property so transferred but hich are situated outside the &hilippines shall
not be included as part of his '(#oss estate' or '(#oss (ift'" &rovided, further, That franchise hich must
be exercised in the &hilippines4 shares, obligations or bonds issued by any corporation or sociedad
anonima organi:ed or constituted in the &hilippines in accordance ith its las4 shares, obligations or
bonds by any foreign corporation eighty!five percent (0,+) of the business of hich is located in the
&hilippines4 shares, obligations or bonds issued by any foreign corporation if such shares, obligations or
bonds have ac9uired a business situs in the &hilippines4 shares or rights in any partnership, business or
industry established in the &hilippines, shall be considered as situated in the &hilippines" &rovided, still
further, that no tax shall be collected under this Title in respect of intangible personal property" (a) if the
decedent at the time of his death or the donor at the time of the donation as a citi:en and resident of a
foreign country hich at the time of his death or donation did not impose a transfer tax of any character, in
respect of intangible personal property of citi:ens of the &hilippines not residing in that foreign country, or
(b) if the las of the foreign country of hich the decedent or donor as a citi:en and resident at the time
of his death or donation allos a similar exemption from transfer or death taxes of every character or
description in respect of intangible personal property oned by citi:ens of the &hilippines not residing in
that foreign country.
The term ',efi5ien5' means" (a) the amount by hich tax imposed by this 7hapter exceeds the amount
shon as the tax by the donor upon his return4 but the amount so shon on the return shall first be
increased by the amount previously assessed (or 7ollected ithout assessment) as a deficiency, and
decreased by the amounts previously abated, refunded or otherise repaid in respect of such tax, or (b) if
no amount is shon as the tax by the donor, then the amount by hich the tax exceeds the amounts
previously assessed, (or collected ithout assessment) as a deficiency, but such amounts previously
assessed, or collected ithout assessment, shall first be decreased by the amount previously abated,
refunded or otherise repaid in respect of such tax.