Imposition of tax.
SEC. 108. Imposition of tax. — (a) There shall be levied, assessed, collected, and paid upon the transfer by any individual, resident or non-resident, of property by gift, a tax, computed as provided in section 109. (b) The tax shall apply whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is real or personal, tangible or intangible.
Rates of tax payable by donor.
SEC. 109. Rates of tax payable by donor. — The tax for each calendar year shall be an amount equal to the excess of a tax, computed in accordance with the rate schedule hereinafter set forth, on the aggregate sum of the net gifts for such calendar year and for each of the preceding calendar years, over a tax, computed in accordance with the rate schedule, on the aggregate sum of the net gifts for each of the preceding calendar years. Rate Schedule Three-fourths of one per centum of the amount by which the net gifts exceed three thousand pesos and do not exceed ten thousand pesos; One and one-fourth per centum of the amount by which the net gifts exceed ten thousand pesos and do not exceed thirty thousand pesos; One and one-half per centum of the amount by which the net gifts exceed thirty thousand pesos and do not exceed fifty thousand pesos; One and seven-eighths per centum of the amount by which the net gifts exceed fifty thousand and do not exceed eighty thousand pesos; Two and one-fourth per centum of the amount by which the net gifts exceed eighty thousand pesos and do not exceed one hundred and ten thousand pesos; Two and five-eighths per centum of the amount by which the net gifts exceed one hundred and ten thousand pesos and do not exceed one hundred and fifty thousand pesos; Three per centum of the amount by which the net gifts exceed one hundred and fifty thousand pesos and do not exceed one hundred and ninety thousand pesos; Three and three eighths per centum of the amount by which the net gifts exceed one hundred and ninety thousand pesos and do not exceed two hundred and forty thousand pesos; Three and three-fourths per centum of the amount by which the net gifts exceed two hundred and fifty thousand pesos and do not exceed two hundred and ninety thousand pesos; Four and one-eighth per centum of the amount by which the net gifts exceed two hundred and ninety thousand pesos and do not exceed three hundred and fifty thousand pesos; Four and one-half per centum of the amount by which the net gifts exceed three hundred and fifty thousand pesos and do not exceed four hundred and twenty thousand pesos; Four and seven-eighths per centum of the amount by which the net gifts exceed four hundred and twenty thousand pesos and do not exceed five hundred thousand pesos; Five and one-fourth per centum of the amount by which the net gifts exceed five hundred thousand pesos and do not exceed six hundred thousand pesos; Five and five-eighths per centum of the amount by which the net gifts exceed six hundred thousand pesos and do not exceed seven hundred and twenty thousand pesos; Six per centum of the amount by which the net gifts exceed seven hundred and twenty thousand pesos and do not exceed eight hundred and fifty thousand pesos; Six and three-eighths per centum of the amount by which the net gifts exceed eight hundred and fifty thousand pesos and do not exceed one million pesos; Six and three-fourths per centum of the amount by which the net gifts exceed one million pesos and do not exceed one million and two hundred thousand pesos; Seven and one-eight per centum of the amount by which the net gifts exceed one million and two hundred thousand pesos and do not exceed one million and five hundred thousand pesos; and Seven and one-half per centum of the amount by which the net gifts exceed one million and five hundred thousand pesos.
Rates of tax payable by donee.
Section 110. Rates of tax payable by donee. — In addition to the gift tax imposed under the preceding section, there shall be levied a tax in the amount equal to the excess of a tax, computed in accordance with the rate schedule hereinafter set forth, on the aggregate sum of the net gifts received by each donee for such calendar year and for each of the preceding calendar years, over a tax, computed in accordance with the rate schedule, on the aggregate sum of the net gifts for each of the preceding years received by each donee. Rate Schedule (a) When the donee or beneficiary is a spouse, a legitimate, recognized natural or adopted child, or a legitimate descendant or ascendant, or either of the adopting parents of the donor, or the father or mother who had recognized such donor as a natural child, and in every case where the donee receives the property exclusively for educational or charitable purposes, there shall be collected from the donee upon the gifts received by him a tax equal to the sum of the following: Three-fourths of one per centum upon the first ten thousand pesos; One and one-half per centum of the amount by which the net gifts exceed ten thousand pesos and do not exceed thirty thousand pesos; Two and one-fourth per centum of the amount by which the net gifts exceed thirty thousand pesos and do not exceed fifty thousand pesos; Three per centum of the amount by which the net gifts exceed fifty thousand pesos and do not exceed eighty thousand pesos; Three and three-fourths per centum of the amount by which the net gifts exceed eighty thousand pesos and do not exceed one hundred and ten thousand pesos; Four and one-half per centum of the amount by which the net gifts exceed one hundred and ten thousand pesos and do not exceed one hundred and fifty thousand pesos; Five and one-fourth per centum of the amount by which the net gifts exceed one hundred and fifty thousand pesos and do not exceed one hundred and ninety thousand pesos; Six per centum of the amount by which the net gifts exceed one hundred and ninety thousand pesos and do not exceed two hundred and forty thousand pesos; Six and three-fourths per centum of the amount by which the net gifts exceed two hundred and forty thousand pesos and do not exceed two hundred and ninety thousand pesos; Seven and one-half per centum of the amount by which the net gifts exceed two hundred and ninety thousand pesos and do not exceed three hundred and fifty thousand pesos; Eight and one-fourth per centum of the amount by which the net gifts exceed three hundred and fifty thousand pesos and do not exceed four hundred and twenty thousand pesos; Nine per centum of the amount by which the net gifts exceed four hundred and twenty thousand pesos and do not exceed five hundred thousand pesos; Nine and three-fourths per centum of the amount by which the net gifts exceed five hundred thousand pesos and do not exceed six hundred thousand pesos; Ten and one-half per centum of the amount by which the net gifts exceed six hundred thousand pesos and do not exceed seven hundred and twenty thousand pesos; Eleven and one-fourth per centum of the amount by which the net gifts exceed seven hundred and twenty thousand pesos and do not exceed eight hundred and fifty thousand pesos; Twelve per centum of the amount by which the net gifts exceed eight hundred and fifty thousand pesos and do not exceed one million pesos; and Twelve and three-fourths per centum of the amount by which the net gifts exceed one million pesos. Where the property is received for educational or charitable purposes, it shall be the duty of the person or persons in charge thereof to submit from time to time a report of the administration and use of the property to the Collector of Internal Revenue and within twenty days after demand therefor has been made by the said Collector. (b) When the donee or beneficiary is a brother or sister who is a legitimate or acknowledged natural child of a common father or mother, or both, of the donor, or the children of such brother or sister, or any descendant mentioned as such in the deed and not included in subsection (a) hereof, there shall be collected the same tax fixed in said subsection with an increase of one hundred per centum. (c) When the donee or beneficiary is a relative within the sixth degree and not included in subsection (a) and (b), there shall be collected the same tax fixed in subsection (a) with an increase of two hundred per centum. (d) When the donee or beneficiary is a relative by affinity within the same degree as those mentioned in subsections (a) and (b), with the exception of the spouse, there shall be collected the same tax fixed in subsection (a) with an increase of three hundred per centum. (e) When the donee or beneficiary is a stranger, there shall be collected from the donee upon the net gifts received by him a tax equal to the sum of the following: Seven and one-half per centum upon the first ten thousand pesos; Fifteen per centum of the amount by which the net gifts exceed ten thousand pesos and do not exceed thirty thousand pesos; Twenty-two and one-half per centum of the amount by which the net gifts exceed thirty thousand pesos and do not exceed fifty thousand pesos; Twenty-six and one-fourth per centum of the amount by which the net gifts exceed fifty thousand pesos and do not exceed eighty thousand pesos; Thirty per centum of the amount by which the net gifts exceed eighty thousand pesos and do not exceed one hundred and ten thousand pesos; Thirty-three and three-fourths per centum of the amount by which the net gifts exceed one hundred and ten thousand pesos and do not exceed one hundred and fifty thousand pesos; Thirty-seven and one-half per centum of the amount by which the net gifts exceed one hundred and fifty thousand pesos; Forty-one and one-fourth per centum of the amount by which the net gifts exceed one hundred and ninety thousand pesos and do not exceed two hundred and forty thousand pesos; Forty-five per centum of the amount by which the net gifts exceed two hundred and forty thousand pesos and do not exceed two hundred and ninety thousand pesos; Forty-eight and three-fourths per centum of the amount by which the net gifts exceed two hundred and ninety thousand pesos and do not exceed three hundred and fifty thousand pesos; Fifty-one per centum of the amount by which the net gifts exceed three hundred and fifty thousand pesos and do not exceed four hundred and twenty thousand pesos; Fifty-two and one-half per centum of the amount by which the net gifts exceed four hundred and twenty thousand pesos and do not exceed five hundred thousand pesos; Fifty three and one-fourth per centum of the amount by which the net gifts exceed five hundred thousand pesos do not exceed six hundred thousand pesos; Fifty-four per centum of the amount by which the net gifts exceed six hundred thousand pesos and do not exceed seven hundred and twenty thousand pesos; Fifty-four and three-fourths per centum of the amount by which the net gifts exceed seven hundred and twenty thousand pesos and do not exceed eight hundred and fifty thousand pesos; Fifty-five and one-half per centum of the amount by which the net gifts exceed eight hundred and fifty thousand pesos and do not exceed one million pesos; and Fifty-six and one-fourth per centum of the amount by which the net gifts exceed one million pesos. For the purpose of this tax, strangers are deemed those relatives by consanguinity of the seventh or more remote degree in the collateral line, and all relatives by affinity not included in subsection (a) and (d): Provided, however, That where the beneficiary is a domestic servant or a trusted employee, there shall be collected on the first two thousand pesos and five thousand pesos, respectively, the tax fixed in subsection (a) of this section and, on the excess, the tax prescribed in this subsection. In cases of property which by the desire of the donor should be divided among the poor, without the designation of any particular person or which should be disposed of for masses or other pious works, there shall be collected from the donee the tax at the rate fixed in this subsection upon the total aggregate amount of such gifts. In case the property donated is subject to the usufructuary interest, use or habitation or annuity of a third person, the tax shall be based on the value of the net gifts less that of the usufruct, use or habitation or annuity determined in accordance with the provisions of section 91.
Transfer for less than adequate and full consideration.
SEC. 111. Transfer for less than adequate and full consideration. — Where property is transferred for less than an adequate and full consideration in money or money's worth, then the amount by which the value of the property exceeded the value of the consideration shall, for the purpose of the tax imposed by this Chapter, be deemed a gift, and shall be included in computing the amount of gifts made during the calendar year.
Exemption of certain gifts.
SEC. 112. Exemption of certain gifts. — The following gifts or donations shall be exempt from the tax provided for in this Chapter: (a) In the case of gifts made by a resident: (1) Gifts made in favor of the spouse and the legitimate, recognized natural, or adopted children where the aggregate value of such gifts in any one year to any one donee does not exceed two thousand pesos. (2) Dowries or gifts made on account of marriage and before its celebration or within one year thereafter by the parents to each of their legitimate, recognized natural, or adopted children to the extent of the first ten thousand pesos. (3) Gifts made in favor of persons other than the spouse and the legitimate, recognized natural, or adopted children to the extent of the first one thousand pesos a year, or five per centum of the net income of the donor during the preceding year, whichever is the greater, but in no case shall the amount of exemption allowed under this paragraph exceed five thousand pesos. (4) Gifts made to or for the use of the National Government or any entity created by any of its agencies which is not conducted for profit, or to any political subdivision of the said Government. (b) In the case of gifts made by a non-resident not a citizen of the Philippines: Gifts made to or for the use of the National Government or any entity created by any of its agencies which is not conducted for profit, or to any political subdivision of the said Government.
Valuation of gifts made in property.
SEC. 113. Valuation of gifts made in property. — If the gift is made in property, the fair market value thereof at the time of the gift shall be considered the amount of the gift: Provided, That in case of real property, the assessed value in the year of the gift as shown in the tax rolls shall be considered as the fair market value, unless the contrary is shown.
Notice of donation to be filed.
SEC. 114. Notice of donation to be filed. — In all cases of donations valued at ten thousand pesos or more, the donor shall, within thirty days after the donation, give a written notice thereof to the Collector of Internal Revenue stating the value of the gifts, the name of the donee and the relation of the donor to the donee. For the purpose of this section, the date of execution of the deed or, in case no deed is executed, the date of the delivery of the thing donated or, in case acceptance is required for the validity of the gifts, the date of acceptance shall be deemed to be the date of the transfer.
Returns. (a) Return by donor.
SEC. 115. Returns. (a) Return by donor. — Any individual who after the approval of this Code or in any calendar year thereafter makes any transfer by gift (except those which under section 112 are exempt from tax shall, for the purpose of the tax prescribed in section 109, make return under oath in duplicate. The return shall set forth (1) each gift made during the calendar year which is to be included in computing net gifts; (2) the deductions claimed and allowable; (3) the net gifts for each of the preceding calendar years; (4) the name of the donee and his relation to the donor; and (5) such further information as may be required by regulations made pursuant to law. (b) Return by donee. — Any donee who after the approval of this Code or in any calendar year thereafter receives any transfer by gift (except those which under section 112 are exempt from tax) shall, for the purpose of the tax prescribed in section 110, make a return under oath in duplicate. The return shall set forth (1) each gift received during the calendar year which is to be included in computing net gifts; (2) the deduction claimed and allowable; (3) the net gifts for each of the preceding calendar years; (4) the name of the donor and his relation to the donee; and (5) such further information as may be required by regulations made pursuant to law. The donee shall file a separate return for gifts received from each donor. (c) Time and place of filing. — The return of the donor or the donee required in this section shall be filed on or before the first day of March following the close of the calendar year with the Collector of Internal Revenue, provincial revenue agent, or with the treasurer of the province, city, or municipality in which the donor or the donee was domiciled at the time of the transfer. (d) Extension for filing. — The Collector of Internal Revenue shall have authority to grant, in meritorious cases, a reasonable extension not exceeding thirty days for filing returns required of the donor or the donee.
Payment of Tax. (a) Time of payment of tax.
SEC. 116. Payment of Tax. (a) Time of payment of tax. — The gifts taxes imposed by sections 109 and 110 of this Chapter shall be due and payable on or before the first day of March following the close of the calendar year and shall be paid by the donor or the donee, as the case may be, to the Collector of Internal Revenue or to the treasurer of the province, city or municipality of which the donor or the donee is a resident. (b) Extension of time. — When the Collector of Internal Revenue finds that the payment on the due date of the gift taxes or of any part of the said amounts would impose undue hardship upon the donor or the donee, the Collector of Internal Revenue may extend the time for payment of any such part not to exceed six months from the date prescribed for the payment of the tax. In such case the amount in respect of which the extension is granted shall be paid on or before the date of the expiration of the period of the extension. Where the taxes are assessed by reason of negligence intentional disregard of rules and regulations, or fraud on the part of taxpayer, no extension will be granted by the Collector. If an extension is granted, the Collector of Internal Revenue may require the donor or donee, as the case may be, to furnish a bond in such amount, not exceeding double the amount of the taxes and with such sureties as the Collector deems necessary, conditioned upon the payment of the said taxes in accordance with the terms of the extension. (c) Voluntary payment. — The tax imposed by this Chapter may be paid, at the election of the donor or the donee, prior to the date prescribed for its payment.
Examination of return and determination of tax.
SEC. 117. Examination of return and determination of tax. — As soon as practicable, after return is filed, the Collector of Internal Revenue shall examine it and shall determine the correct amount of the gift taxes.
Interest on extended payments. (a) Tax shown on the return.
SEC. 118. Interest on extended payments. (a) Tax shown on the return. — If the time for the payment of the amount determined as the taxes by the donor or by the donee is extended under the authority of subsection (b) of section 116, there shall be collected, as part of such amounts, interest thereon at the rate of six per centum per annum from the date when such payment should have been made if no extension had been granted, until the expiration of the period of the extension. (b) Deficiency. — In case an extension for the payment of a deficiency is granted, there shall be collected, as a part of the taxes, interest on the part of the deficiency the time for payment of which is so extended, at the rate of six per centum per annum for the period of the extension.
SEC. 119. Additions to the tax in case of non-payment. (a) Tax shown on the return. (1) Payment not extended. — Where the amount of the taxes determined by the donor or the donee as the taxes or any part of such amount is not paid on the due date of the taxes, there shall be collected as a part of the taxes, interest upon such unpaid amount at the rate of one per centum a month from the due date until is paid. (2) Payment extended. — Where an extension of time for payment of the amount so determined as the tax by the donor or the donee has been granted, and the amount the time for the payment of which has been extended, and the interest thereon determined under subsection (a) of section 118 is not paid in full prior to the expiration of the period of the extension, interest at the rate of one per centum a month shall be collected on such unpaid amount from the date when the same was originally due until it is paid. (b) Deficiency. (1) Payment not extended. — Where a deficiency, or any interest assessed in connection therewith, or any addition to the taxes provided for in section 120 is not paid in full within thirty days from the date of the notice and demand from the Collector, there shall be collected as a part of the taxes, interest upon the unpaid amount at the rate of one per centum a month from the date of such notice and demand until it is paid. (2) Payment extended. — If the part of the deficiency the time for payment of which is extended is not paid in accordance with the terms of the extension, there shall be collected, as a part of the taxes, interest on such unpaid amount at the rate of one per centum a month from the date the same was originally due until it is paid. (c) Surcharge. — If any amount of the taxes included in the notice and demand from the Collector of Internal Revenue is not paid in full within thirty days after such notice and demand, there shall be collected in addition to the interest prescribed above and as a part of the taxes a surcharge of five per centum of the unpaid amount.
Ad valorem penalties.
SEC. 120. Ad valorem penalties. — In case of any failure to make and file a return within the time prescribed in subsection (c) of section 115 or by the Collector of Internal Revenue, there shall be added to the tax twenty-five per centum of its amount, except that, when a return is voluntarily and without notice from the Collector filed after such time, and it is shown that the failure to file it was due to a reasonable cause and not to willful neglect, no such addition shall be made to the tax. In case a false or fraudulent return is willfully made, there shall be added to the tax or to the deficiency tax, in case any payment has been made on the basis of such return before the discovery of the falsity or fraud, a surcharge of fifty per centum of its amount. The amount so added to any tax shall be collected at the same time and in the same manner and as a part of the tax unless the tax has been paid before the discovery of the neglect, falsity, or fraud, in which case the amount so added shall be collected in the same manner as the tax.
Specific penalties.
SEC. 121. Specific penalties. — (a) Any person required under this Chapter to pay any tax, or required by law or regulations made under authority thereof to make a return, keep any records, or supply any information for the purpose of the computation, assessment, or collection of any tax imposed by this Chapter, who fails to pay such tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations, shall, in addition to other penalties provided for in this Chapter, be fined not more than two thousand pesos or imprisoned for not more than six months, or both. (b) Any person who attempts in any manner to evade or defeat any tax imposed by this Chapter, or the payment thereof, or who transfers fictitiously by sale or otherwise any property to evade or defeat the purpose of this Chapter, shall, in addition to other penalties, be punished by a fine of not more than four thousand pesos or imprisoned for not more than one year, or both.
Definitions.
SEC. 122. Definitions. — For the purposes of this Title, the terms "gross estate" and "gift" include real estate and tangible personal property, or mixed, physically located in the Philippines; franchise which must be exercised in the Philippines; shares, obligations, or bonds issued by any corporation or sociedad anonima organized or constituted in the Philippines in accordance with its laws; shares, obligations, or bonds issued by any foreign corporation eighty-five per centum of the business of which is located in the Philippines; shares, obligations, or bonds issued by any foreign corporation if such shares, obligations, or bonds have acquired a business situs in the Philippines; shares, or rights in any partnership, business or industry established in the Philippines; or any personal property, whether tangible or intangible, located in the Philippines: Provided, however, That in the case of a resident, the transmission or transfer of any tangible personal property, regardless of its location, is subject to the taxes prescribed in this Title: And provided, 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 was a resident of a foreign country which at the time of his death did not impose a transfer tax or death tax of any character in respect of intangible personal property of citizens of the Philippines not residing in that foreign country, or (b) if the laws of the foreign country of which the decedent was a resident at the time of his death allow a similar exemption from transfer taxes or death taxes of every character in respect of intangible personal property owned by citizens of the Philippines not residing in that foreign country. The term "deficiency" means (a) the amount by which the taxes imposed by this Chapter exceed the amount shown as the taxes by the donor or donee upon his return; but the amount so shown on the return shall first be increased by the amounts previously assessed (or collected without assessment) as a deficiency, and decreased by the amounts previously abated, refunded, or otherwise repaid in respect of such taxes; or (2) if no amount is shown as the taxes by the donor or donee upon his return, or if no return is made by the donor or donee, then the amount by which the taxes exceed the amounts previously assessed (or collected without assessment) as a deficiency; but such amounts previously assessed, or collected without assessment, shall first be decreased by the amounts previously abated, refunded, or otherwise repaid in respect of such taxes.
Provisions on this page are reproduced verbatim from official open data. See the attribution line.
Source: Official Gazette of the Republic of the Philippines — Philippine laws are public documents (works of the government).