Donor in Philippine Gift Tax Law

Definition

A donor is any natural or juridical person who, during their lifetime or by will, transfers property, money, or other valuable consideration to another person (the donee) without receiving equivalent value in return. Under the National Internal Revenue Code (NIRC §§ 100–102), such gratuitous transfers are subject to donor's tax, a transfer tax imposed on the privilege of transferring property by gift (NIRC §100).

Key Characteristics of a Donor

Gratuitous Transfer

The hallmark of a donor relationship is that the transfer is made without consideration. If the donee pays fair market value or provides equivalent benefit, no gift tax arises. The transfer must be voluntary and motivated by generosity, not commercial exchange (NIRC §99, defining "gift").

Intent to Benefit

The donor must intend to benefit the donee. This intent is presumed when a person transfers property without receiving full consideration. The donor's motive—whether affection, family duty, or charity—does not affect tax liability; only the absence of equivalent value matters (BIR Ruling DA-489-03).

Capacity to Transfer

A donor must have legal capacity to make the gift. Minors, persons under guardianship, and those declared incompetent by court may not be donors. Corporations may be donors if authorized by their bylaws or board resolution (NIRC §99).

Donor's Tax Obligations

Tax Rate

Effective 1 January 2018 (TRAIN Law, RA 10963), the donor's tax rate is a flat 6% on the net gift (NIRC §102, as amended). This replaced the former graduated scale of 2–15%. The 6% rate applies to all donors regardless of the amount or relationship to the donee.

Taxable Gift Amount

The taxable gift is the fair market value of the property transferred, less any allowable deductions. Each donor receives an annual exclusion of ₱250,000 per donee (NIRC §102(b)). Gifts between spouses are exempt from donor's tax (NIRC §102(c)). Gifts to charitable, religious, educational, and scientific institutions may qualify for exemption if registered with the BIR (NIRC §102(d)).

Filing and Payment

A donor must file a Donor's Tax Return (BIR Form 709) within 30 days after the gift is made, even if no tax is due (NIRC §104). The tax is due and payable upon filing. Failure to file or pay results in surcharge (25%) and interest (12% per annum) (NIRC §248).

Who Is a Donor

Natural Persons

Any individual, whether Filipino citizen, resident alien, or non-resident alien, may be a donor. Non-resident aliens are taxed only on gifts of property located in the Philippines (NIRC §100(a)).

Juridical Persons

Corporations, partnerships, and other entities may be donors. A corporation's gift of property is subject to donor's tax if made gratuitously (NIRC §100(b)).

Donor vs. Testator

A donor makes gifts during lifetime. A testator transfers property by will after death, which is subject to estate tax (6% flat rate under TRAIN, NIRC §§ 86–87), not donor's tax. However, a person may be both: they may make lifetime gifts (as a donor) and leave a will (as a testator).

Common Donor Scenarios in the Philippines

A parent gifts ₱500,000 to a child for education: the parent is the donor. A business owner transfers company shares to a family member without payment: the owner is the donor. A retiree donates ₱1,000,000 to a registered charity: the retiree is the donor, but the gift may be exempt under NIRC §102(d).