Article 42p. 42

NATIONAL INTERNAL REVENUE CODE TAXATION, TARIFF and CUSTOMS LAWS

an adequate and full consideration in money or money's

worth. (as amended by RA No 10963)

SEC. 101. 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 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; and

(2) Gifts in favor of an educational and/or charitable,

religious,

cultural

or

social

welfare

corporation,

institution,

accredited

non-government

organization, trust or philanthropic organization or

research

institution

or

organization:

Provided,

however, That not more than thirty percent (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,

accredited

nongovernment

organization,

trust

or

philanthropic

organization

and/or

research

institution or organization' is a school, college or

university and/or charitable corporation, accredited

nongovernment organization, trust or philanthropic

organization

and/or

research

institution

or

organization,

incorporated

as a nonstock entity,

paying no dividends, governed by trustees who

receive

no

compensation,

and

devoting

all

its

income, whether students' fees or gifts, donation,

subsidies or other forms of philanthropy, to the

accomplishment and promotion of the purposes

enumerated in its Articles of Incorporation.

(as amended by RA No 10963)

(B)

In the Case of Gifts Made by a Nonresident not a

Citizen of the Philippines. -

(1) 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.

(2) 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

thirty percent (30%) of said gifts shall be used by

such donee for administration purposes.

(C) Tax Credit for Donor's Taxes Paid to a Foreign

Country. -

(1)

In General. - The tax imposed by this Title upon

a donor who was a citizen or a resident at the time

of donation shall be credited with the amount of any

donor's

tax

of

any

character

and

description

imposed by the authority of a foreign country.

(2)

Limitations on Credit. - The amount of the

credit taken under this Section shall be subject to

each of the following limitations:

(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 net gifts situated

within such country taxable under this Title

bears to his entire net gifts; 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 donor's

net

gifts

situated

outside

the

Philippines

taxable under this title bears to his entire net

gifts.

SEC. 102. 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. In case of real property, the provisions of Section

88(B) shall apply to the valuation thereof.

SEC. 103. Filing of Return and Payment of Tax. -

(A) Requirements. - any individual who makes any

transfer by gift (except those which, under Section 101, are

exempt from the tax provided for in this Chapter) shall,

for the purpose of the said tax, make a 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) Any previous net gifts made during the same

calendar year;

(4) The name of the donee; and

(5) Such further information as may be required by

rules and regulations made pursuant to law.

(B) Time and Place of Filing and Payment - The return

of the donor required in this Section shall be filed within

thirty (30) days after the date the gift is made and the tax

due thereon shall be paid at the time of filing. Except in

cases where the Commissioner otherwise permits, the

return shall be filed and the tax paid to an authorized

agent

bank,

the

Revenue

District

Officer,

Revenue

Collection Officer or duly authorized Treasurer of the city

or municipality where the donor was domiciled at the

time of the transfer, or if there be no legal residence in

the Philippines, with the Office of the Commissioner. In

the case of gifts made by a nonresident, the return may

be filed with the Philippine Embassy or Consulate in the

country where he is domiciled at the time of the transfer,

or directly with the Office of the Commissioner.

SEC. 104. Definitions. - For purposes of this Title, the

terms ' gross estate ' and ' gifts ' include real and personal

property,

whether

tangible

or

intangible,

or

mixed,

wherever situated: Provided, however, That where the

decedent or donor was a nonresident alien at the time of

his death or donation, as the case may be, his real and

personal property so transferred but which are situated

outside the Philippines shall not be included as part of his

' gross

estate ' or ' gross gift ': Provided, further, That

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

by

any

foreign

corporation

eighty-five percent (85%) 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,

shall

be

considered as situated in the Philippines: Provided, still

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 or the

donor at the time of the donation was a citizen and

resident of a foreign country which at the time of his

death or donation did not impose a transfer 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 or donor was a citizen and resident at the

time of his death or donation allows a similar

exemption from transfer or death taxes of every

character or description 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 tax imposed by this

Chapter exceeds the amount shown as the tax by

the donor upon his return; but the amount so

shown on the return shall first be increased by the

amount previously assessed (or Collected without

© Compiled by RGL

42 of 201