Transfer Taxes

TRANSFER TAXES
Simplified by She F. Lamsen-Orjalo
ESTATE TAXATION
DECEDENT GROSS ESTATE* DEDUCTIONS (from the gross estate to arrive at the NET ESTATE) NOT ALLOWED AS DEDUCTIONS
Filipinos
and
Resident
Aliens
Value of the property
wherever situated to
the extent of the
interest therein of
the decedent at the
time of his death
Expenses, losses,
claims, indebtedness
and taxes;
(i) Actual Funeral expenses OR in an amount equal to 5% of the gross estate which
but not to exceed P200,000.00, whichever is lower. The expenses must be duly
supported by receipts or invoices or other evidence to show that they were actually
incurred.

- Expenses incurred after the
internment.
- Any portion of the funeral and burial
expenses borne or defrayed by
relatives and friends of the deceased.
- Medical expenses as of the last illness
will not form part of funeral expenses
but should be claimed as medical
expenses if incurred within 1 year
before the death of the decedent
(ii) and Judicial expenses of the testamentary or intestate proceedings. Judicial
expenses which have been allowed by the probate court are deductible even if the
expenses were incurred after the estate taxes have been paid.

Losses incurred during the settlement of the estate arising from fires, storms,
shipwreck, or other casualties, of from robbery, theft or embezzlement, when such
losses are not compensated for by insurance or otherwise, and if at the filing of the
return such losses have not been claimed as a deduction for income tax purposes in
an income tax return, and Provided that such losses were incurred not later than the
last day for the payment of the estate tax as prescribed by law.

(i) Claims against the estate (all unpaid obligations and liabilities of the decedent at
the time of his death) (a) at the time the indebtedness was incurred, the debt
instrument was duly notarized; (b) if the loan was contracted within 3 years before
the decedent’s death, the executor or administrator shall submit a statement
showing the disposition of the proceeds of the loan. Claims against the estate
allowed as a deduction is an existing claim, not one that was previously condoned.

(ii) Claims of the deceased against insolvent persons where the value of the
decedent’s interest is included in the gross estate and there is proof of insolvency

For unpaid mortgages upon, or any indebtedness in respect to property where the
value of the decedent’s interest in the property undiminished by such mortgage or
indebtedness, is included in the value of the gross estate, the mortgage or
indebtedness is founded upon a promise or agreement; when founded upon a
promise or agreement, the deduction is limited to the extent that the mortgage or
indebtedness were contracted bona fide and for adequate consideration in money or
money’s worth.

Income taxes upon income received after
decedent’s death;
Property taxes not accrued before
decedent’s death
Estate taxes
Property previously
taxed (VANISHING
DEDUCTION);
Transfers for public
use;
Net share of the
surviving spouse in
the conjugal
partnership
THESE ARE ALSO ALLOWED AS DEDUCTIONS FROM THE GROSS ESTATE OF THE NON-
RESIDENT ALIEN DECEDENT

Amount received by
heirs under RA 4917
(Tax Exempt
retirement or
separation;
Provided that the amount of separation benefit is included as part of the gross estate
of the decedent
Medical Expenses;

Incurred by the decedents within 1 year prior to his death which shall be duly
substantiated by receipts, Provided, That in no case shall the deductible medical
expenses exceed P500,000. If it exceeds P500,000, the excess neither could it be
deducted as “claims against the estate.”
Standard Deduction; An amount equivalent to P1M shall be allowed as an additional deduction without
need of substantiation.
The Family Home;

Amount equivalent to the current market value of the decedent’s family home not
exceeding P1M, only the excess shall be subject to estate tax, certified by the
barangay captain of the locality as the dece3dent’s family home
Non-
Resident
Aliens
Value of the property
situated in the
Philippines to the
extent of the interest
therein of the
decedent at the time
of his death

Intangible property:
- Franchise which
must be exercised
The proportion
which expenses,
losses, claims,
indebtedness and
taxes bears to the
total value of the
entire gross estate
wherever situated;
Phil. Gross Estate Expenses, Losses, Allowable
------------------------- X Indebtedness and Taxes = Deductions
World Gross Estate from Gross
estate
Medical Expenses;
Amount received by heirs under RA 4917
(Tax Exempt retirement or separation;
Standard Deduction;
The Family Home;
Property previously
taxed (VANISHING
DEDUCTION);
An amount equal to the value specified below of any property forming a part of the
gross estate situated in the Philippines of any person who died within 5 years prior to
the death of the decedent, or transferred to the decedent by gift within 5 years prior
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
 issued by any
foreign
corporation 85%
of the business
of which is
located in the
Philippines
 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
- The deduction
allowed from
the gross estates
of citizens,
resident and
non-resident
estates for
properties which
were previously
subject to
deduction
because the
deduction
allowed
diminishes over
a period of 5
years
- This is provided
in order to
reduce tax on
property
received from a
prior decedent
where the
deceased died
within 5 years
after the death
of the prior
decedent.
to his death, where such property can be identified as having been received by the
decedent from the donor by gift, or from such prior decedent by gift, bequest, devise,
or inheritance, or which can be identified as having been acquired in exchange for
property so received:
100% of the value if the prior decedent died within 1 year prior to the death of the
decedent, or if the property was transferred to him by gift within the same period
prior to his death;
80% of the value if the prior decedent died more than 1 year but not more than 2
years prior to the death of the decedent, or if the property was transferred to him by
gift within the same period prior to his death;
60% of the value if the prior decedent died more than 2 years but not more than 3
years prior to the death of the decedent, or if the property was transferred to him by
gift within the same period prior to his death;
40 % of the value if the prior decedent died more than 3 years but not more than 4
years prior to the death of the decedent, or if the property was transferred to him by
gift within the same period prior to his death; and
20 % of the value if the prior decedent died more than 4 years but not more than 5
years prior to the death of the decedent, or if the property was transferred to him by
gift within the same period prior to his death.

FORMULA:
Value of Property Previously Taxed
LESS: Mortgage debt paid, if any (first deduction)
= 1
st
Basis

Value of gross estate of present decedent
LESS: Expenses, etc. Transfers for public purposes, etc.
= 2
nd
deduction

1
st
Basis
LESS: 2
nd
deduction
= 2
nd
Basis
MULTIPLIED by: 80%,60%, etc
=VANISHING DEDUCTION
Transfers for public
use;
The amount of all bequests, legacies, devices, or transfers to or for the use of the Phil.
Government, or any political subdivision thereof, for exclusively public purposes
Net share of the
surviving spouse in
the conjugal
partnership
The net share of the surviving spouse in the conjugal partnership property as
diminished by the obligations properly chargeable to such property shall, for the
purpose of computing the net estate be deducted from the net estate of the
decedent (Sec. 86(C), NIRC)
This also applied equally to the net share of a surviving spouse in the absolute
community of property.
*GEN. RULE: Gross Estate shall consists of the value of all property, wherever situated, of the decedent (except non-resident aliens) to the extent of his interest at the time of his
death. EXCEPTIONS: (There are certain instances where the decedent does not have any title to a property but may have a beneficial interest in a property at the time of his
death. Thus, such properties are included as part of the gross estate.) PROPERTIES UPON WHICH THE DECEDENT DOES NOT HAVE INTEREST AT THE TIME OF HIS DEATH BUT
STILL FORMS PART OF THE ESTATE:
WHEN INCLUDED AS PART OF A DECEDENT’S GROSS ESTATE
To the extent of any interest therein of which
WHEN NOT INCLUDED AS PART OF A
DECEDENT’S GROSS ESTATE
(i) transfers in
contemplation
of death
The decedent has at any time made a transfer, by trust or otherwise, in contemplation of, or intended to take effect in
possession or enjoyment at or after his death,
OR
The decedent has at any time made a transfer, by trust or otherwise, under which he has retained for his life or for a period not
ascertainable without reference to his death or for any period which does not in fact end before his death, the possession or
enjoyment of, or the right to the income of the property, or the right either alone or in conjunction with any person to designate
the person who shall possess or enjoy the property or the income therefrom.
Where the transfer is a bonafide sale for
an adequate and full consideration in
money or money’s worth
(ii) revocable
transfers

The decedent has at any time made a transfer, by trust or otherwise, where the enjoyment thereof was subject at the date of his
death to any change through the exercise of a power (in whatever capacity exercisable) by the decedent alone or by the
decedent in conjunction with any other person (without regard to when or from what source the decedent acquired such power)
to alter, amend, revoke, or terminate, or when any such power is relinquished in contemplation of decedent’s death.
When power to alter, amend or revoke considered to exist on date of decedent’s death:
(i) Even though the exercise of the power is subject to a precedent giving of notice or
(ii) Even though the alteration, amendment or revocation takes effect only on the expiration of a stated period after the
exercise of the power, whether or not on or before the date of the decedent’s death (a) notice has been given or (b) the
power has been exercised.
In such cases, proper adjustment shall be made representing the interests which would have been excluded from the power if
the decedent had lived, and for such purpose if the notice has not been given or the power has not been exercised on or before
the date of his death, such notice shall be considered to have been given, or the power exercised, on the date of his death.
Where the transfer is a bonafide sale for
an adequate and full consideration in
money or money’s worth
(iii) property
passing under
general power
of appointment
- power which is
exercisable in
favor of the
decedent, his
If the power of appointment is special or
specific – one which authorizes the done
or holder of the power to consume
principal, limited by an ascertainable
standard relation to the decedent’s
health, education, support or
maintenance.
AND/OR
estate, his
creditors, or the
creditors of his
estate
Where the transfer is a bonafide sale for
an adequate and full consideration in
money or money’s worth
(iv) proceeds of
life insurance

General criteria: The life insurance proceeds are payable
i. to the decedent’s estate
ii. to beneficiaries other than the decedent’s estate and the decedent possessed incidents of ownership (the right or power of
the insured that gives him economic benefits) in the policy
N.B.:
 The insurance proceeds must arise from an insurance taken up on the life of the decedent, not upon the life of others.
 In order to negate the “incidents of ownership” which would result to the exclusion from gross estate of the insurance
proceeds, the insured has to designate the beneficiary in an irrevocable capacity.

(v) transfers for
insufficient
consideration
Amount included:
i. Where the decedent’s property is transferred in contemplation of death, revocable transfer or passed under a general
power of appointment for a consideration in money or money’s worth
ii. but not for an adequate and full consideration in money or money’s worth,
iii. the amount includible as part of the decedent’s gross estate should be the difference between the fair market value at the
time of the decedent’s death and the actual consideration received by the decedent.
FORMULA FOR COMPUTATION:
Fair market value of property at decedent’s death
LESS: Actual Consideration received by decedent
Amount includible in decedent’s gross estate
Where the transfer is a bonafide sale for
an adequate and full consideration in
money or money’s worth
(vi) capital of
surviving spouse

REMINDERS:
 Life insurance proceeds are always excluded from gross income, whether the designation of the beneficiary is revocable or irrevocable. The concept of irrevocability finds
application to exclusions from gross because the proceeds pass on after death subject to the decedent’s control if the designation of the beneficiary is revocable. Thus,
included as part of gross estate. The life insurance proceeds are excluded from gross estate if the designation is irrevocable because the decedent has not retained any
interest which pass on after death. Thus excluded from gross estate.

ADMINISTRATIVE and OTHER REQUIREMENTS
 Instances where notice of death required to be filed
 In all cases of transfers subject to tax, or
 where, though exempt from tax (not over than ₱200,000.00), the gross value of the estate exceeds ₱20,000.00.
 Who should file written notice of death and the estate tax return?
 The executor, administrator or any of the legal heirs, as the case may be,
Administrator of decedent’s property during her lifetime is not automatically administrator of her estate upon death. Thus, there was absolutely no obligation on the part
of said administrator during the lifetime, to inform the BIR of the decedent’s death. (Estate of the late Juliana Diez vda. de Gabriel vs CIR, GR 155541, Jan. 27, 2004)
 Period for filing notice of death
 The written notice of death shall be filed with the Commissioner of IR
 within 2 months after the decedent’s death, or
 within a like period after qualifying as such executor or administrator
 Period for filing and payment of estate tax return
 shall be filed and paid within 6 months from the decedent’s death. “PAY AS YOU GO” concept – the tax should be paid at the time of the filing of the tax return.
 a certified copy of the schedule of partition and the order of the court approving the same shall be furnished the Commissioner within 30 days after the promulgation of
such order.
 The Commissioner or any Revenue Officer authorized by him shall have authority to grant, in meritorious cases, a reasonable extension, not exceeding 30 days, for filing
the return. The application for the extension of time to file the estate tax return must be filed with the RDO where the estate is required to secure its TIN and file the tax
returns of the estate, which RDO, likewise, has jurisdiction over the estate tax return required to be filed by any party as a result of the distribution of the assets and
liabilities of the decedent.
 It may happen that the estate is suffering from liquidity problems because it does not have sufficient cash to pay the estate taxes. In such a case, the executor or
administrator may opt to do either of the following: (a) Pay the tax in installments OR (b) apply for an extension of time within which to file the tax.
 When the Commissioner finds the payment on due date of the estate tax or of any part thereof would impose undue hardship upon the estate or any of the heirs, he may
extend the time for payment or any part thereof not to exceed (a) 5 years, in case the estate is settled through the courts, or (b) 2 years, in case the estate is settled
extrajudicially.
 GROUNDS FOR DENIAL OF EXTENSION: Where the taxes are assessed by reason of (i) negligence, (ii) intentional disregard of rules and regulations, or (iii) fraud on the part of
the taxpayer.
 Place of filing estate tax return and payment of estate taxes
Resident of
the Philippines
 The administrator or executor shall register the estate of the decedent and secure a new TIN therefore from the RDOffice where the decedent was domiciled at the
time of his death and shall file the estate tax return and pay the corresponding estate tax with the
i. An authorized agent bank/Accredited Agent Bank, or
ii. Revenue District Officer, or
iii. Collection Officer, or
iv. Duly authorized Treasurer of the city or municipality in which the decedent was domiciled at the time of his death, whichever is applicable, following prevailing
collection rules and procedures.
 In any other place where the Commissioner of IR permits the estate tax to be filed.
 The Commissioner of IR may continue to exercise his power to allow a different venue/place in the filing of tax returns notwithstanding the provisions of the NIRC.
Non-resident
with no legal
residence in
the Philippines
 With the CIR
 In case of a non-resident citizen or alien, with executor or administrator in the Philippines, the estate tax return shall be filed with and the TIN for the estate shall be
secured from the RDO where such executor or administrator is registered.
 In case the executor or administrator is not registered, the estate tax return shall be filed with and the TIN of the estate shall be secured from the RDO having
jurisdiction over the executor or administrator’s legal residence.
 In case the decedent does not have an executor or administrator in the Philippines, the estate tax return shall be filed with and the TIN for the estate shall be secured
from the CIR through RDO No. 39-South QC
 In any other place where the Commissioner of IR permits the estate tax to be filed.
 The Commissioner of IR may continue to exercise his power to allow a different venue/place in the filing of tax returns notwithstanding the provisions of the NIRC.
 Tax credit for estate taxes paid to a foreign country. Sec. 86 (E)(1): The estate taxes imposed shall be credited with the amounts of any estate tax imposed by the authority
of a foreign country. It means that the foreign estate taxes shall be deducted from the Philippine estate taxes that are due from the estate.
 The amount of the credit shall be subject to each of the following limitations:
 The amount of the credit in respect to the tax paid to any country shall not exceed the same proportion of the tax against which such credit is taken, which the
decedent’s net estate situated within such country taxable under the NIRC bears to his entire estate; and
 The total amount of the credit shall not exceed the same proportion of the tax against which such credit is taken, which the decedent’s net estate situated outside the
Philippines taxable under the NIRC bears to his entire net estate.
 EXEMPTION OF CERTAIN ACQUISITIONS AND TRANSMISSIONS. (Sec. 87, NIRC) These are not included in all gross estates whether of decedent Filipinos, resident and non-
resident aliens, hence tax exempt:
(i) Merger of the usufruct in the owner of the naked title
Valuation of usufruct subject to estate tax: to determine the value of the right of usufruct, use or habitation, as well as that of annuity, there shall be taken into account the probable
life of the beneficiary in accordance to the latest Basic Standard Mortality Table, to be approved by the Finance Secretary
(ii) Transmission from the fiduciary to the fideicommissary heir
(iii) Transmission from the first heir to another beneficiary in accordance with the desire of the predecessor
(iv) Transfers to social welfare, cultural and charitable institutions
All bequests, devises, legacies or transfers to social welfare, cultural and charitable institutions, no part of which inures to the benefit of any individual: Provided, however, That not
more than 30% of said bequests, devises, legacies or transfers shall be used by such institutions for administration purposes.
(v) Acquisitions and Transfers of Intangible Personal Property
(See NOTES in Gross Estate of Non-Resident Alien Decedent, page 1 Supra)
Intangible property of a non-resident alien decedent considered as situated 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
 issued by any foreign corporation 85% of the business of which is located in the Philippines
 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
Is subject to RECIPROCITY PROVISION: When the non-resident alien decedent’s country (i) did not impose a transfer tax of any character in respect of intangible personal property
of Filipino citizens not residing in such foreign country OR (ii) allows a similar exemption from transfer or death taxes of every character or description in respect of intangible
personal property owned by Filipino citizens not residing in that foreign country, the Philippines will exempt from estate taxation intangible personal property situated in the
Philippines of such non-resident alien decedent. Therefore, since intangible personal properties of a non-resident alien are included in his
gross estate, it will be only tax exempt by virtue of the reciprocity provision.







DONOR’s TAXATION
 Tax treatment of transfers for insufficient consideration of property, other than real property subjected to the final capital gains tax. Where property, other than real
property that has been subjected to the final capital gains tax, is transferred for less than an adequate and full consideration in money or money’s worth, then the amount by
which the fair market value of the property at the time of the execution of Contract to Sell or execution of the Deed of Sale which is not preceded by a Contract to Sell
exceeded the value of the agreed or actual consideration or selling price shall be deemed a gift, and shall be included in computing the amount of gifts made during the
calendar year. (Sec. 100, NIRC; Sec. 11, 5
th
par. Rev. Regs. No. 2-2003) Properties covered here include both movables and immovable that are not considered as capital assets
 Situs of donor’s taxation. Where the transfer took place. Thus, only transfers that take place within the Philippines are subject to donor’s taxes unless the donors are Filipino
citizens who are residents of a foreign country. This is so because donor’s taxes are in the nature of taxes imposed upon the privilege to do something, which in this case is to
transfer property. Consequently, if the donor is a non-resident alien, then the concept of reciprocity does not find application because the transaction is not taxable. The
concept of reciprocity may be used to exempt from donor’s taxes only if the donation took place in the Philippines.
 Donations of Intangible Property that are not subject to donor’s tax (Concept of Reciprocity)
 If the donor at the time of the donation was a citizen and resident of a foreign country which at the time of the donation did not impose a transfer tax of any
character, in respect of intangible personal property of citizens of the Philippines residing in that foreign country, or
 If the laws of the foreign country of which the donor was a citizen and resident at the time of the donation allows a similar exemption from transfer taxes of every
character or description in respect of intangible personal property owned by citizens of the Philippines residing in that foreign country.
 Tax payable by the donor if the done is a stranger: 30% of the net gifts.
 Stranger for purposes of donor’s tax: a person who is NOT a (i) brother, sister (whether by whole or half-blood), spouse, ancestor, and lineal descendant, or (ii) a relative by
consanguinity in the collateral line within the fourth degree of relationship.
 DONATIONS EXEMPT FROM THE PAYMENT OF DONOR’S TAXES
1. Total net gifts made
during the calendar
year not exceeding
P100,000.00
Donation/Gift Splitting – a) spreading the donation or gift over numerous calendar years in order to avail of the exemption from donor’s taxes or lower donor’s
taxes.
b) Spouses donate a common property. In such an instance, the donation or gift is to be treated as divided between the spouses. One or the other of the spouses
may then avail of the beneficial tax treatment of splitting, such as availing of the lower tax brackets.
2. Donation for political
campaign purposes
 Any contribution in cash or in kind to any candidate, political party or coalition of parties for campaign purposes shall be governed by the Election Code (Sec.
99 (C), NIRC)
 Exemption applies only if reported to the COMELEC. Any provision of law contrary notwithstanding, any contribution in cash or in kind to any candidate or
political party or coalition of parties for campaign purposes, duly reported to the COMELEC, shall not be subject to the payment of any gift tax (R.A. 7166, Sec.
13, last par)
 Corporations are not allowed to make donations for partisan political activities including for political campaign purposes. No corporation, domestic or
foreign, shall give donations in aid of any political party or candidate or for purposes of partisan political activity. (Corp. Code, Title IV, Sec.36.9)
3. Certain gifts made by a
resident
i) Dowry Exclusion: Dowries or gifts made on account of marriage and before its celebration or within 1 year thereafter by parents to each of their legitimate,
recognized natural, or adopted children to the extent of the first 10,000;
ii) Gifts made to or for the use of the Phil. Govt or any entity created by any of its agencies which is not conducted for profit, or to any political subdivisions of
said Govt;
iii) Gifts in favor of an educational and/or charitable, religious, cultural or social welfare corporation, institution, foundation, trust or philanthropic organization or
research institution or organization; Provided, however, That not more than 30% of said gifts shall be used by such donee for administration purposes;
For the purpose of this exemption, a non-profit educational and/or charitable corporation, institution, foundation, trust or philanthropic organization
and/or research institution or organization is a school, college or university and/or charitable corporation, foundation, trust or philanthropic organization
and/or research institution, or organization, (1) incorporated as a non-stock entity, (2) paying no dividends, (3) governed by trustees who received no
compensation, and (4) devoting all its income, whether student’s fees or gifts, donations, subsidies or other forms of philanthropy, to the accomplishment and
promotion of the purposes enumerated in its articles of incorporation.
iv) All donations, contributions and gifts exempted under special laws made to the (a) Philippine American Cultural Foundation and (b) Ramon Magsaysay Awards
Foundation
 Requirement for notice of donation by a donor engaged in business. In order to be exempt from donor’s tax and to claim full deduction of the donation given
to qualified donee institutions duly accredited by the Philippine Council for NGO Certification, Inc. (PCNC), the donor engaged in business shall give a notice of
donation on every donation worth at least P50,000.00 to the RDO which has jurisdiction over his place of business within 30 days after receipt of the qualified
donee institution’s duly issued Certificate of Donation, which shall be attached to the said Notice of Donation, stating that not more than 30% of the said
donation/gifts for the taxable year shall be used by such accredited non-stock, non-profit corporation NGO institution (qualified-donee institution) for
administration purposes.
4. Certain gifts made by
non-resident aliens
i) Gifts made to or for the use of the Phil. Govt or any entity created by any of its agencies which is not conducted for profit, or to any political subdivisions of
said Govt;
ii) Gifts in favor of an educational and/or charitable, religious, cultural or social welfare corporation, institution, foundation, trust or philanthropic organization or
research institution or organization; Provided, however, That not more than 30% of said gifts shall be used by such donee for administration purposes
 Domondon opined that from a reading of the heading of Sec. 101 (B). “In the Case of Gifts Made by a Nonresident not a Citizen of the Philippines”, nonresidents
Filipinos are not subject to the exemption. Applying the principle of strictissimi juris, nonresident Filipinos are not entitled to the tax exemption. This requires
remedial legislation because it would be subjecting nonresident citizens to a higher burden than nonresident aliens.
5. Donations of
Intangibles subject to
reciprocity
Concept of Reciprocity
 If the donor at the time of the donation was a citizen and resident of a foreign country which at the time of the donation did not impose a transfer tax of any
character, in respect of intangible personal property of citizens of the Philippines residing in that foreign country, or
 If the laws of the foreign country of which the donor was a citizen and resident at the time of the donation allows a similar exemption from transfer taxes of
every character or description in respect of intangible personal property owned by citizens of the Philippines residing in that foreign country.
6. Donations for athlete’s
prizes and awards
Conditions for exemption: (i) The donation must be prizes or awards (ii) given to athletes (iii) in local and international sports tournaments and competitions (iv)
held in the Philippines or abroad, and (v) sanctioned by their respective national sports associations.
Domondon submits that this exemption may be availed of by corporations and individuals, whether resident or non-resident. This is evident from the use of the
unqualified word “donors” in RA 7549.
7. Donations under the
“adopt-a-school”
program
Aid/help/contribution/donation provided by an adopting private entity under the provisions of RA 8525 (Adopt-a-School Act of 1998) to a government school,
whether elementary, secondary, post-secondary or tertiary are exempt from donor’s taxes. (Sec. 3(b), Rev. Reg. 10-2003)
The assistance may be in the form of, but not limited to, infrastructure, teaching and skills development, learning support, computer and science laboratories, and
food and nutrition.
 TAX CREDITS FOR FOREIGN DONOR’s TAXES
 Paid to a foreign country
a. Donor was a Filipino citizen or resident alien;
b. at the time of foreign donation;
c. donor’s taxes of any character and description;
d. are imposed and paid by the authority of a foreign
country
 Limitations on tax credit:
a. The amount of the credit in respect to the tax paid to any country shall not exceed the same proportion of the
tax against which such credit is taken, which the decedent’s net gifts situated within such country taxable under
the NIRC bears to his entire net gift; and
b. The total amount of the credit shall not exceed the same proportion of the tax against which such credit is taken,
which the decedent’s net gift situated outside the Philippines taxable under the NIRC bears to his entire net gift.