Donor's Tax Philippines Guide for SMEs
Complete compliance guide for small and medium enterprises on donor's tax, including who is liable, tax rates, filing procedures, DST requirements, and transfer of ownership steps
What you'll learn in this donor's tax guide
This Donor's Tax Philippines guide for SMEs explains what donor's tax is, who must pay it, how to compute it, when and where to file, applicable Documentary Stamp Tax (DST), and requirements for property transfer.
For other tax compliance topics, also see our BIR Business Registration Guide, 13th Month Pay Philippines 2026 Guide, 5% Withholding Tax on Rental Philippines Guide, and Philippines Business Compliance Guide 2026.
What is Donor's Tax?
Donor's Tax is a tax imposed on donations or gifts made between living persons. This tax applies to the gratuitous transfer of property between two or more persons who are alive at the time of transfer.
Key Points to Understand:
- The tax applies whether the transfer is in trust or otherwise
- It covers both direct and indirect gifts
- It applies to all types of property: real or personal, tangible or intangible
- Both the donor (giver) and donee (receiver) must be living at the time of transfer
Who is Liable to File and Pay?
1 Primary Responsibility
The donor (the person giving the gift) is primarily liable to file and pay the donor's tax.
2 Secondary Responsibility
If the donor fails to file and pay, the donee (the person receiving the gift) becomes liable.
Important Note for SME Owners
As a business owner, if you're giving gifts to employees, partners, or other individuals, you are considered the donor and must comply with donor's tax requirements.
When and Where to File and Pay?
Filing Deadline
Donor's Tax Return (BIR Form No. 1800) must be filed within 30 days from the date of donation.
The 30-day period starts counting from the date the gift was made.
Payment Channels
Where to File
- File at the Revenue District Office (RDO) where the donor is registered
- For donations of real property, file at the RDO having jurisdiction over the location of the property
Donor's Tax Rate and Computation
💰 Donor's Tax Rate Structure
| Net Taxable Gifts | Tax Rate | Computation |
|---|---|---|
| Up to PHP 100,000 | 0% | Exempt |
| Over PHP 100,000 to PHP 200,000 | 4% | PHP 4,000 + 4% of excess over PHP 100,000 |
| Over PHP 200,000 to PHP 500,000 | 6% | PHP 8,000 + 6% of excess over PHP 200,000 |
| Over PHP 500,000 to PHP 1,000,000 | 8% | PHP 26,000 + 8% of excess over PHP 500,000 |
| Over PHP 1,000,000 to PHP 3,000,000 | 10% | PHP 66,000 + 10% of excess over PHP 1,000,000 |
| Over PHP 3,000,000 to PHP 5,000,000 | 12% | PHP 266,000 + 12% of excess over PHP 3,000,000 |
| Over PHP 5,000,000 to PHP 10,000,000 | 15% | PHP 566,000 + 15% of excess over PHP 5,000,000 |
| Over PHP 10,000,000 | 20% | PHP 1,316,000 + 20% of excess over PHP 10,000,000 |
How to Compute
- Determine the gross value of all gifts made within the calendar year
- Subtract allowable deductions (Standard Deduction: PHP 10,000 if not itemizing)
- Apply the appropriate tax rate based on the net taxable amount
Documentary Stamp Tax (DST) for Donations
Important: When donating real property or shares of stock, you must also pay Documentary Stamp Tax. DST is a separate tax from donor's tax and must be paid simultaneously.
For Real Property Donations
Of the fair market value or zonal value, whichever is higher
Basis: The higher of fair market value or zonal value as determined by BIR
For Shares of Stock Donations
Or fractional part thereof of the par value
Basis: Based on the par value of the shares
Transfer of Ownership Requirements
Electronic Certificate Authorizing Registration (eCAR)
After paying donor's tax and DST, you must secure an electronic Certificate Authorizing Registration (eCAR) from the BIR.
The eCAR is required before transferring ownership with:
- Registry of Deeds (for real property)
- Corporate Secretary/Transfer Agent (for shares of stock)
Documentation Needed
- Deed of Donation (notarized)
- Tax Clearance Certificate (BIR Form No. 2355)
- Proof of payment of donor's tax and DST
- eCAR from BIR
- Other documents required by the registering agency
Practical Tips for SME Owners
1. Plan Your Donations Strategically
- Consider the tax implications before making large gifts
- Spread donations over multiple years if it helps optimize tax rates
- Keep records of all donations made during the calendar year
2. Maintain Proper Documentation
- Always execute a written Deed of Donation for significant gifts
- Have the deed notarized for validity
- Keep copies of all tax payments and BIR-issued documents
3. Be Aware of Common Mistakes
- Missing the 30-day deadline - This can result in penalties and surcharges
- Incorrect valuation - Using lower than actual property value can lead to tax assessment issues
- Forgetting DST - Remember that DST is separate from donor's tax
- Not securing eCAR - This is required for ownership transfer
4. Understand Exemptions
- Certain donations may be exempt from donor's tax (e.g., to government, educational institutions)
- Review BIR regulations for specific exemption rules
- File proper documentation if claiming exemptions
✓ Compliance Checklist
Before making a donation, ensure you:
Key Takeaways for Business Owners
- 1. Donor's Tax applies to all gratuitous transfers between living persons, regardless of property type
- 2. File within 30 days from the date of donation to avoid penalties
- 3. Pay both donor's tax and DST when donating real property or shares of stock
- 4. Secure eCAR before transferring ownership of property or shares
- 5. Keep complete records of all donations and tax payments
- 6. Consult tax professionals for complex situations or large donations
Need Help?
For specific questions about donor's tax compliance:
- Contact your BIR Revenue District Office
- Consult with a certified tax accountant or lawyer
- Visit the BIR website (www.bir.gov.ph) for official forms and guidelines