Donation Philippines

Question: If the property is a deed of donation, how much tax should I pay?

Answer:

In the Philippines, a property obtained through a deed of donation is subject to Donor's Tax. The tax rates and exemptions are governed by the National Internal Revenue Code (NIRC) and updated tax reforms.

What is the current tax rate for Donor's Tax?

As of the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the donor's tax rate is generally 6% based on the total value of the gift or donation.

Are there exemptions to Donor's Tax?

Yes, there are exemptions:

1. Relatives Exemption: Donations worth P250,000 or less in a calendar year are exempted.

2. Educational and Medical Assistance: Donations specifically for educational and medical purposes are exempt, provided they meet the criteria set by law.

3. Special Cases: Certain charitable institutions, government entities, and accredited non-governmental organizations may also be exempted from Donor's Tax.

How is the tax value calculated?

The tax value is generally calculated based on the fair market value (FMV) of the property at the time of the donation. There are prescribed methods for assessing FMV, depending on the type of property.

What are the steps for paying Donor's Tax?

1. File Tax Return: The donor must file BIR Form 1800 (Donor's Tax Return) and submit it to the Revenue District Office where the donor is registered.

2. Payment: Pay the calculated Donor's Tax within 30 days after the donation is made.

3. Attach Documentary Requirements: Attach the Deed of Donation, proof of payment, and other required documents to your tax return.

4. Receive Stamp: Ensure that the BIR stamps your copies to signify successful submission.

Conclusion:

In the Philippines, donations are generally subject to a 6% Donor's Tax. Certain exemptions apply, and the tax should be paid within 30 days following the donation. Always consult a tax advisor to fully understand your tax obligations.