Tax Implications of Donated Shares to a Donee in the Philippines

A comprehensive practitioner-level guide (updated to 24 April 2025)

1. Governing Law and General Framework

Source	Key Provisions	Latest Amendments
National Internal Revenue Code (NIRC) of 1997	Secs. 98-104 (Donor’s Tax) • Secs. 173-176 (Documentary Stamp Tax on shares)	TRAIN Law (RA 10963, effective 1 Jan 2018) consolidated the donor’s-tax brackets into a flat 6 % and raised the annual exemption to ₱250,000.
Civil Code of the Philippines	Arts. 725-752 on the form and validity of donations	—
Revenue Regulations (RR)	RR No. 12-2018 (donor’s-tax rules post-TRAIN); RR No. 02-2003 (valuation of listed shares); RR No. 06-2013 (valuation of unlisted shares)	—
Revenue Memorandum Orders & Circulars	RMO 15-2003 (book-value templates); RMC 137-2017 (accredited donee institutions)	—

2. Identification of the Taxable Event

Transfer Scenario	Donor’s-Tax Exposure	Notes
Pure Gratuitous Transfer (Donation Inter Vivos)	Yes – donor pays 6 % on net gift* exceeding ₱250,000 per calendar year	“Net gift” = FMV of shares – allowable deductions (if any)
Partly for consideration (mixed donation)	Donor’s-tax on excess of FMV over consideration plus possible capital-gains tax on the portion “for value”	Common in estate-freezing strategies
Transfer causa mortis (inheritance)	Not donor’s-tax but estate tax (flat 6 % of net estate)	Outside this article’s scope

*Under Sec. 100, transfers for “less than adequate and full consideration” are treated as gifts to the extent of the excess FMV.

3. Valuation Rules for Shares (Sec. 102 NIRC)

Shares Listed on the Philippine Stock Exchange (PSE)
- FMV = Mean between the highest and lowest quoted selling prices on the date of donation.
- If no trading on that date, use the mean on the nearest preceding trading day.
Unlisted common shares
- FMV = Book value per share nearest the date of donation, adjusted for appraisal surplus and any subsequent events.
Unlisted preferred/redeemable/track-record shares
- FMV = Paid-up value plus adjustments for dividends in arrears, liquidation preference, convertibility, etc.
Shares of a foreign corporation
- If donor is resident/citizen: taxable if situated in the Philippines or if reciprocity is absent (see Sec. 104(B)).
- If non-resident alien, intangible property is exempt if a reciprocity clause applies (the foreign jurisdiction exempts Philippine citizens).

4. Computation of Donor’s-Tax

Tax Due = (FMV of gift – ₱250,000 annual exemption – deductible gifts) × 6 %

Annual Exemption: An individual donor (resident or non-resident) enjoys a single ₱250,000 exemption covering all gifts made during the calendar year.
Deductible Gifts (Sec. 101(A)): Gifts to the National Government, its agencies, or accredited non-profit educational, charitable, religious, cultural, or social-welfare institutions are exempt from donor’s-tax if not >30 % of the gift is used for administration.
Split-donations: Where property is donated to multiple donees on the same date, prorate the exemption.

5. Other National Taxes

Tax	Who Pays	Rate / Base	When Due
Documentary Stamp Tax (DST) (Sec. 174)	Donor or donee (parties may agree)	₱0.75 per ₱200 of par or actual value*	On or before BIR Form 2000-OT filing (within 5 days after the month of donation)
Capital-Gains Tax (CGT)	None on donation; CGT applies only when the donee later sells the shares	15 % (unlisted) or stock-transaction tax 0.6 % (listed, sold through PSE)	Upon eventual sale
Stock-Transfer Service Fees (transfer agent / PCD)	Donee by practice	Per share or per certificate schedule	At time of transfer

*Use the higher of par or FMV; “no-par” shares use actual value.

6. Local Taxes & Fees

Local Transfer Tax: None – donor’s-tax is a national imposition.
Notarization Fees: Required if the deed of donation is in a public instrument (mandatory for donations of personal property > ₱5,000; Art. 748 Civil Code).
Registry of Deeds/SEC/PSE Fees: For private corporations, the corporate secretary must cancel the old certificate and issue a new one; filing fees with the SEC (for non-stock donees) may apply.

7. Compliance Workflow

Step	Responsible Party	Form	Deadline
1. Execute Deed of Donation (public instrument if >₱5k)	Donor & Donee	—	On date of donation
2. Obtain CPA-certified balance sheet/book value computation (if shares unlisted)	Donor	—	Same period
3. BIR Form 1800 (Donor’s-Tax Return)	Donor	1800	Within 30 days from date of donation
4. Pay Donor’s-Tax & DST at Authorized Agent Bank or via eFPS/eBIRForms	Donor (DST may be shared)	1800 / 2000-OT	Same 30-day window for donor’s-tax; DST: within 5 days after end of month
5. Submit supporting docs to RDO/ONETT*	Donor	Inventory of shares, deed, appraisal, SEC cert.	Within 30 days
6. Certificate Authorizing Registration (CAR) release	BIR	—	Typically 2-8 weeks
7. Present CAR to corporate secretary/transfer agent; issue new share certificate in donee’s name	Donor/Donee	—	Immediately after CAR

*ONETT = One-Time Transaction Unit of the Revenue District Office.

8. Tax Planning & Practical Considerations

Annual Exemption Batching
- Spouses may each donate up to ₱250k tax-free; stagger transfers over calendar years.
Estate-Freezing via Preferred Shares
- Donor retains voting/participation rights via voting preferred; donates non-voting preferred to heirs, locking value at issuance price.
Reciprocity for Expat Donors
- Confirm if donor’s home country grants similar exemption to Filipino donors to avoid double taxation.
Donation to an Accredited NGO
- Requires current BIR accreditation and timely issuance of a Certificate of Donation (COD) to claim exemption.
Valuation Disputes
- BIR may challenge book value; maintain audited FS as of closest quarter-end.
Penalties
- Surcharge 25 % or 50 % (wilful neglect) plus 12 % p.a. interest and compromise penalties for late filing/payment.
Anti-Money Laundering (AML)
- Transfers > ₱500k may trigger covered transaction reports for securities dealers/transfer agents.

9. Donee’s Perspective

Issue	Treatment
Income-Tax Basis	Carry-over basis = FMV used for donor’s-tax. Donee recognizes gain/loss on eventual sale against this basis.
Holding-Period Requirement	To qualify for capital-asset treatment (unlisted), shares must generally be held > 12 months; otherwise ordinary gain.
Subsequent Sale of Listed Shares	Stock-transaction tax (0.6 %) on gross selling price; no CGT.
Receipt Reporting	Non-profit donees must record donation as “donated capital” or unrestricted fund and comply with RR 15-10 reporting.

10. Special Topics

Cross-Border Gifts of Philippine-Situs Shares by Non-Residents
- Shares of a domestic corporation are always Philippine-situs; gift is taxable unless reciprocity applies.
Donation between Spouses or Common-Law Partners
- Still subject to 6 % donor’s-tax; the TRAIN Law removed the pre-2018 graduated brackets but kept no spousal exemption.
Family Corporations & Share Splits
- Stock dividends are not donations per se, but subsequent assignment of the dividend shares without consideration is.
Employee Share Awards
- If made gratuitously by a major shareholder to employees, donor’s-tax applies (donor = shareholder), and fringe-benefit tax may arise if employer is involved.

11. Documentary Checklist

Notarized Deed of Donation (with marital consent, if applicable)
Board Resolution approving transfer (if required by by-laws)
Latest Audited FS and interim FS (unlisted shares)
SEC Certificate of Incorporation & latest GIS
Stock Transfer Ledger extracts
BIR Form 1800 + payment confirmation
BIR Form 2000-OT (DST) + payment confirmation
Certificate of Donation (if donee NGO)
CAR from BIR
New Stock Certificate in donee’s name

12. Illustrative Example

Facts:
• Mr. Reyes, Filipino resident, donates on 15 May 2025 100,000 common shares (par ₱1; book value ₱50) of ABC Manufacturing Corp. (unlisted) to his daughter. No other gifts this year.

FMV of gift: 100,000 × ₱50 = ₱5,000,000
Less annual exemption: ₱250,000
Net taxable gift: ₱4,750,000
Donor’s-Tax: 6 % × ₱4,750,000 = ₱285,000
DST:
Base: Higher of par or book: ₱50;
Tax: ₱0.75 ÷ ₱200 × 100,000 × ₱50 ➜ ₱18,750

Total cash outlay: ₱303,750 (excluding notarial & agent fees)

13. Common Pitfalls

Mis-timing the 30-day filing period – “date of donation” is the execution date not the date of CAR release.
Using par value for listed shares – always use mean trading price.
Ignoring shareholder-level taxes on subsequent sale by donee.
Assuming spousal transfers are tax-free – they are not.
Failure to substantiate book value – unaudited interim FS may be rejected.

14. Frequently Asked Questions

Question	Answer (short)
Can I net-off the ₱250k exemption per donee?	No. The exemption is per donor per calendar year, no matter how many donees.
Are gifts of shares to a foreign charity tax-exempt?	Only if the charity is accredited by the Philippine BIR or qualifies under reciprocity.
Is the donation void without notarization?	If > ₱5,000 (personal property) the deed must be in a public instrument; otherwise voidable.
Does the donee pay income tax on receipt?	No. Gratuitous receipt is excluded from gross income under Sec. 32(B)(3), but donor’s-tax still applies to the donor.

15. Concluding Guidance

Transferring shares by way of gift is a powerful estate-planning and philanthropy tool in the Philippines, but it attracts a constellation of national taxes (donor’s-tax, DST), strict deadlines, and valuation rules. Meticulous documentation, awareness of the 30-day donor’s-tax window, and coordination with transfer agents are indispensable. Proper structuring—such as staggering gifts, leveraging NGO exemptions, or employing preferred shares—can mitigate tax leakage and facilitate smoother succession. Always review the most recent BIR issuances and, for complex or cross-border cases, obtain a written ruling or engage accredited tax counsel.

This article is for general information only and not a substitute for individualized legal or tax advice. Consult the NIRC, current BIR regulations, and qualified professionals for specific transactions.