Donor's Tax
donor’s tax is the Tax on the transfer of property as a gift or donation between living individuals
so sa donation kase, it is a process of giving gratuitously or free of charge. Although, kapag kase
mga legal processes nagkakaroon ng taxation or may mga iniimposed na taxes siyempre to
maintain the operations and services of the government
And so, there are 4 categories of donation according to its purpose
- pure or simple
- remuneratory/compensatory
- conditional/modal
- onerous
aside from the 4 categories, there are also 4 essential elements na kailangang iconsider para
maging valid yung donation
- Capacity of the donor
- Donative Intent
- Delivery of the gift
- Acceptance of the donee
- Who will pay?
Anyone who transfers/induces to transfer property or the donor, siya responsible
for paying this tax, whether in trust or not, whether the gift is direct or indirect, and
whether the property is real or personal, regardless of their legal status.
Based on our TRAIN LAW, donations made during the calendar year in excess of
P250,000 shall be subject to a 6% donor's tax, in which the donor is required to pay to the
Bureau of internal revenue (BIR) within 30 days since the date of donation. May mga
exemptions itong donors tax if yung donation will be made for educational and charitable
institutions. And kapag sa mga relatives in direct line
and Failure to file and pay the donor's tax is subject to penalties – with 25%
surcharge (50% kapag fraudulent/illegal), 20% interest, and compromise penalties ranging from
P200. 00 to P25,000.00
Estate Tax
• Levied on the transfer of a deceased person's estate to their lawful heirs and beneficiaries upon
death
• Covers certain transfers deemed as testamentary dispositions by law
Estate tax, almost similar sa donor’s tax however in estate tax, it is the transfer of
properties from a deceased person to its heirs and beneficiaries unlike sa donors tax na between
living individuals. So Basically, even when you die you will still have to pay taxes. Pero hindi
naman literal, kasi yung mga taong naiwan like executor, administrator, and especially yung mga
heirs of the deceased, will be responsible for the filing of the estate tax return. So, If someone dies,
taxes will have to be paid in order to transfer their assets and properties to their heirs or
beneficiaries.
So Estate Tax has a flat rate of 6% same sa donor's tax due to the TRAIN LAW. And The
standard deduction is Php 5M. Estate tax requires a lot of documents that varies depending on the
type of property to be transferred. And Time for filing shall be within 1 year after the decedent’s
death. However, the BIR Commissioner can grant an extension up to 30 days. And in case there
is insufficient of money, the estate may be allowed to be paid by installment for 2 years without
any civil penalties and interest.
Income Tax
• Imposed on annual profits derived from property, professions, trades, offices, or an individual's
income and earnings
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By its definition, it is due on the earnings of an individual from employment that na lawful
or legal. Regardless sa status like full-time or part-time job. Kase kapag ang isang
individual is income earner mass nagiging liable siya sa pagbabayad ng taxes
kaya, No employed individual is free from this responsibility. Although, may exeptions
naman, which is yung mga individuals earning Php250,000 below, like yung mga
minimum wage earner, and yung mga non-resident, international workers, yung mga
OFW’s ay exempted sila sa income tax
So, Both individual and non-individual taxpayers sa Philippines ay required na
magdeclare ng income taxes nila in a quarterly or annual basis.
Mayroong up to 35% income tax rate dito sa pilipinas, ito ay nakadepende sa kung gaano
karami yung kinikita ng isang tao. Kase may range ng incomes na pinagbabasehan kung
ano yun tax rate para don sa income range na yon or yung bracket na tinatawag
Kase The TRAIN law has imposed provisions to reduce personal income tax for all
taxpayers in all income brackets below PHP 8M between a 2-5% reduction except those
sa mga highest income brackets.
And a fact is that, Governments receive funding from these income taxes. They are used
to pay for government commitments, support public services, and provide citizens with
commodities.
Percentage Tax
• so sa percentage tax naman, It is a type of Business tax or sales tax on individuals or entities
engaged in selling or leasing goods, properties, or services in their trade or business
• Applicable if gross annual sales or receipts do not exceed P550,000 and not registered for VAT
So Certain Philippine enterprises that sell or lease goods, real estates, or services may be subject
to the Percentage Tax system. Such as individuals and non-individuals, including, but are not
limited to, like estates, trusts, partnerships, and corporations that are not registered for Vat
. kase percentage tax is yung seller yung nagbabayad nung tax, unlike sa value added tax na
yung consumer yung nagbabayad
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Under the Corporate Recovery and Tax Incentives for Enterprises or the CREATE Law,
the percentage tax rate is 3%. Pero may be determined by the amount of revenue they
made in a year, as well as dun sa type of business or industry nila.
So yung mga businesses subjected to the percentage tax system are required to file tax
returns and make quarterly payments to avoid penalties.
yung computation of the Percentage Tax is based on their gross sales or earnings made
only within the Philippines excluded yung mga earnings from internatonal
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This tax was created by the government to raise money and ensure that the tax burden is
distributed equitably across the nation's enterprises.
Who is required to file the percentage tax?
The list of required filers encompasses a diverse range of individuals and entities, including nonindividuals, lessors, transportation services, franchise grantees, financial intermediaries, insurance
companies, and operators of specific establishments, ensuring comprehensive coverage of taxable
transactions in the Philippines.
Who is exempted from paying percentage taxes?
As per the BIR, businesses or individuals who earn less than P250,000 annually are exempt from paying
percentage tax, income tax, or the 8% gross receipt tax. This is also in accordance with the TRAIN Act,
which allows these businesses and individuals to not file any tax return. However, the Department of
Finance is yet to release the Implementing Rules and Regulations (IRR) for the changes in the TRAIN law.
Bookmark this link to stay updated once the DOF releases the IRR.
INCASE OF EMERGENCY
Final Withholding Tax
• Applicable to specific payors and not creditable against the payee's income tax for the entire year
• Represents and is considered as the complete and final payment of the payee's income tax on that income
There are different final withholding tax rates including
20% for Interest from currency deposits, trust funds, and deposit substitutes
10% for Cash dividend payment by a domestic corporation to citizens and residents’ aliens
15% for Cash dividend payment by a domestic corporation to Non-Resident Foreign Corporation
failure to withhold Final Withholding Tax, needs to pay penalties amounting to:
a. 25%-50% surcharge based on tax unpaid
b. 12% annual interest based on tax unpaid
c. Compromise Penalty P1,000 – 25,000 every time you fail to withhold
Withholding Tax on Government Money Payments
• Tax withheld by government offices, government-owned or -controlled corporations, and local
government units
• Applies before making payments to private individuals, corporations, partnerships, or associations
1. Withholding tax on GMP – Value added tax vat registered
2. Withholding tax on GMP – Percentage tax non-vat registered
Excise Tax
• Imposed on the production, sale, or consumption of certain goods within the country
• Applicable to domestically manufactured or produced goods for local sale, and consumption, as well as
imported goods.
Excise taxes are primarily for businesses. It is a tax imposed on the manufacture, trade, or use of a
good within a nation. It covers both imported goods and goods made or produced in the Philippines for
domestic sale, consumption, or any other purpose. Excise taxes are taxes levied on specific goods or
services like fuel, tobacco, and alcohol.
Excise taxes can be ad valorem (paid by percentage rates) or specific (cost charged by unit or purchase).
Many of them are paid for by the businesses, who raise prices to pass the tax on to customers.
Therefore, Retail prices are raised because merchants pay excise taxes to wholesalers and take them into
account when pricing products. As a result, most excise taxes may or may not be immediately apparent to
the consumers. However, some excise taxes, such as property taxes and levies on specific retirement
account activities, are paid directly by consumers.