Donor's Tax: 6% Above ₱250,000 a Year
Bureau of Internal Revenue · taxes
Quick answer
Donor's tax is 6% of total gifts made in a calendar year above a ₱250,000.00 exemption. The threshold is per year and cumulative across all gifts, not per gift. The return is due within 30 days of each gift. Selling below fair market value can be deemed a gift.
Every figure on this page is from Bureau of Internal Revenue's own published documents.
Last verified 1 source, listed below
National Internal Revenue Code of 1997, as amended1. PHGuides is independent and not affiliated with BIR.
The rate and the threshold
Donor’s tax is 6% for each calendar year, computed on the total gifts in excess of ₱250,000.00.
Two things about that sentence do the work.
It is flat. The Code draws no distinction between a gift to a child and a gift to a stranger. The old graduated schedule, and the punitive rate on gifts to non-relatives, are gone.
It is annual and cumulative. The ₱250,000.00 is not a per-gift allowance. It is the exempt slice of everything you gave away in that calendar year.
| Gifts in one calendar year | Taxable amount | Donor’s tax at 6% |
|---|---|---|
| ₱200,000.00 | ₱0.00 | ₱0.00 |
| ₱250,000.00 | ₱0.00 | ₱0.00 |
| ₱500,000.00 | ₱250,000.00 | ₱15,000.00 |
| ₱1,000,000.00 | ₱750,000.00 | ₱45,000.00 |
| ₱5,000,000.00 | ₱4,750,000.00 | ₱285,000.00 |
Five separate gifts of ₱100,000.00 to five different people in the same year are one ₱500,000.00 total, not five exempt gifts.
The donor’s tax calculator totals a calendar year of gifts before applying the ₱250,000.00 exemption, which is the order that decides the answer.
What counts as a gift
Section 98 is written broadly on purpose. The tax applies to a transfer by gift by any person, resident or nonresident, and:
- whether the transfer is in trust or otherwise;
- whether the gift is direct or indirect;
- whether the property is real or personal, tangible or intangible.
There is no room in that language for a structure that moves value without the tax following it.
Selling cheap can be a gift
This is the provision that catches ordinary families, and it is Section 100.
Where property is transferred for less than adequate and full consideration, the amount by which fair market value exceeds the consideration is deemed a gift and goes into the calendar year total.
| Figure | |
|---|---|
| Fair market value of the car | ₱800,000.00 |
| Price actually paid | ₱200,000.00 |
| Deemed gift | ₱600,000.00 |
| Less the annual exemption, if unused | ₱250,000.00 |
| Taxable | ₱350,000.00 |
| Donor’s tax at 6% | ₱21,000.00 |
The escape is narrower than it sounds. A sale in the ordinary course of business is treated as made for adequate consideration, but the Code defines that as a transaction which is bona fide, at arm’s length, and free from any donative intent. All three, not one of the three. A discounted sale to a relative fails the third limb almost by definition.
Real property is carved out. Section 100 applies to property “other than real property referred to in Section 24(D)”. Selling a house below market is a capital gains question, not a donor’s tax one, because capital gains tax already charges 6% on the higher of selling price or fair market value.
Exempt gifts
Section 101 exempts two categories, and they are the same for residents and for nonresidents who are not citizens.
| Category | Condition |
|---|---|
| Gifts to or for the use of the National Government, any non-profit entity created by its agencies, or any political subdivision | None stated |
| Gifts to educational, charitable, religious, cultural or social welfare corporations, accredited NGOs, trusts, philanthropic organizations or research institutions | Not more than 30% of the gift used for administration purposes |
The 30% cap is a real condition, not decoration. A donee that spends more than 30% of the gift on administration takes the exemption with it.
For the second category the Code also defines what qualifies: a non-stock entity, paying no dividends, governed by trustees who receive no compensation, and devoting all its income to the purposes in its Articles of Incorporation.
Gifts of property, not cash
If the gift is made in property, the fair market value at the time of the gift is the amount of the gift. For real property, valuation follows Section 88(B), the same provision the estate tax uses.
Filing: 30 days, per gift
| Requirement | Period |
|---|---|
| Return filed and tax paid | Within 30 days after the date the gift is made |
| Filing method | Electronically or manually |
| Where | Any authorized agent bank, a Revenue District Office through a Revenue Collection Officer, or an authorized tax software provider |
The mismatch between the annual threshold and the per-gift deadline trips people up. The ₱250,000.00 is measured across the calendar year, but you file within 30 days of each gift. A gift in March is filed in March, and a later gift in November that pushes the year past ₱250,000.00 is filed in November on the amount then taxable.
The return is made under oath, in duplicate, and must set out each gift made during the calendar year to be included in net gifts, the deductions claimed and allowable, any previous net gifts made during the same calendar year, the name of the donee, and whatever further information the regulations require.
Foreign gifts and foreign tax
A donor who was a citizen or resident at the time of donation may credit donor’s tax of any character imposed by a foreign country, subject to two limitations. The credit for tax paid to any one country cannot exceed the proportion that net gifts in that country bear to entire net gifts; and the total credit cannot exceed the proportion that net gifts outside the Philippines bear to entire net gifts.
For a nonresident alien donor, property situated outside the Philippines is not part of the gross gift. The Code then lists what counts as situated in the Philippines, including shares, obligations or bonds issued by a foreign corporation 85% of whose business is located here.
There is also a reciprocity rule: no tax is collected on intangible personal property where the donor was a citizen and resident of a foreign country that imposed no transfer tax on Filipinos’ intangibles, or whose laws allow a similar exemption.
Where it sits among the transfer taxes
| Tax | Rate | Triggered by |
|---|---|---|
| Donor’s tax | 6% above ₱250,000.00 a year | Giving property away while alive |
| Estate tax | 6% of the net estate | Death |
| Capital gains tax | 6% of the higher of price or fair market value | Selling real property held as a capital asset |
All three are 6%, and that is not a coincidence: TRAIN aligned them deliberately. What differs is the base and the deductions. Estate tax gets a ₱5,000,000.00 standard deduction; donor’s tax gets ₱250,000.00 a year; capital gains tax gets none.
Where this goes wrong
Treating ₱250,000.00 as a per-gift allowance. It is the exempt slice of the whole calendar year.
Assuming a gift to a stranger is taxed differently. The 6% is flat regardless of the relationship.
Selling to a relative below market and calling it a sale. Section 100 deems the shortfall a gift unless the transaction is bona fide, at arm’s length and free from donative intent.
Waiting until year end to file. The return is due within 30 days of each gift.
Missing the 30% administration cap. A donee spending more than 30% of the gift on administration loses the exemption for it.
Frequently asked questions
- How much is donor's tax?
- 6% for each calendar year, computed on total gifts in excess of ₱250,000.00. Section 99(A) makes the first ₱250,000.00 of gifts in a year exempt, so the 6% applies only to what sits above that.
- Is the ₱250,000 per gift or per year?
- Per calendar year, and cumulative. The Code says the tax for each calendar year is computed on the total gifts in excess of ₱250,000.00 made during that year. Five gifts of ₱100,000.00 in one year total ₱500,000.00, so ₱250,000.00 is taxable and the tax is ₱15,000.00.
- Does it matter who I give to?
- Not for the rate. The 6% is flat and the Code draws no distinction between relatives and strangers, which is a change from the pre-2018 schedule. Who receives it matters only for the exemptions in Section 101.
- What gifts are exempt?
- Gifts to or for the use of the National Government, any of its non-profit agencies, or any political subdivision. Also gifts to educational, charitable, religious, cultural or social welfare corporations, accredited NGOs, trusts, philanthropic organizations and research institutions, provided not more than 30% of the gift is used for administration purposes.
- I sold my car to my brother cheap. Is that a gift?
- It can be. Section 100 provides that where property is transferred for less than adequate and full consideration, the amount by which fair market value exceeds the consideration is deemed a gift. The exception is a sale made in the ordinary course of business, meaning bona fide, at arm's length, and free from donative intent.
- Does that apply to selling a house below market?
- No. Section 100 expressly excludes real property referred to in Section 24(D), which is the capital gains tax provision. Real property sold as a capital asset is taxed at 6% of the higher of selling price or fair market value under the capital gains rules, so the shortfall is already captured there.
- When do I file?
- Within 30 days after the date the gift is made, with the tax paid at the time of filing. That is per gift, not annually, so a donation in March is filed in March even though the ₱250,000.00 threshold is measured across the whole year.
- Are political donations covered?
- Not by this Chapter. Section 99(B) provides that any contribution in cash or in kind to a candidate, political party or coalition of parties for campaign purposes shall be governed by the Election Code, as amended.