Donor’s Tax Computation: Step-by-Step With Deductions and Deadlines

Donor’s tax computation in the Philippines follows one formula: add every gift you have made during the calendar year, subtract any fully exempt gifts and the ₱250,000 annual exemption, multiply what remains by 6%, then subtract any donor’s tax you already paid earlier that same year. The donor pays the tax, not the recipient, and the running total resets only when the calendar year does.1Supreme Court E-Library. Republic Act No. 10963 – TRAIN Law

Value the Gift First

You cannot compute the tax until you have the correct value on paper, and the rules depend on what you are giving.

  • Real property: use whichever is higher between the BIR zonal value and the fair market value from the provincial or city assessor’s schedule. The law requires the higher figure, not the lower.2Bureau of Internal Revenue. Guidelines and Instructions for BIR Form No. 1800 Donor’s Tax Return
  • Listed shares of stock: the weighted average closing price on the date of donation.
  • Unlisted shares: the corporation’s book value or net asset value as of the donation date, using BIR-prescribed methods.
  • Vehicles, jewelry, artwork, and other personal property: fair market value on the date of the gift. A professional appraisal is worth having for high-value items, because the BIR can challenge an unsupported figure.

Selling property for less than its fair market value counts as a gift for the difference. The gap between actual value and price paid is treated as a donation. A sale made in the ordinary course of business, at arm’s length, and without any intent to give a gift is not caught by this rule.3Bureau of Internal Revenue. Revenue Regulations No. 12-2018

What Comes Off Before You Apply the 6%

The first ₱250,000 in total net gifts during a calendar year is exempt. Only the amount above that gets taxed at 6%.1Supreme Court E-Library. Republic Act No. 10963 – TRAIN Law Note that this is a single yearly threshold across all your gifts, not a per-recipient allowance. Give ₱150,000 to one person and ₱150,000 to another and you have ₱300,000 in gifts, ₱50,000 of which is taxable.

Two categories of gifts come out of the computation entirely:

  • Donations to the Philippine national government, its non-profit agencies, or its political subdivisions.
  • Donations to accredited educational, charitable, religious, cultural, or social welfare organizations, provided no more than 30% of the donated amount goes to administrative expenses. The organization must be a non-stock entity that pays no dividends and is governed by uncompensated trustees.3Bureau of Internal Revenue. Revenue Regulations No. 12-2018

One exemption people still ask about is gone. Before the TRAIN Law took effect in 2018, parents could give up to ₱10,000 in dowry or wedding gifts per child tax-free. That exemption was removed. Wedding gifts now count toward the ₱250,000 threshold like any other donation.

The Computation, Step by Step

Every new gift restarts the math from the year’s first gift and works forward. That is the point of the cumulative structure.

  • Step 1. Add the fair market value of all gifts made during the calendar year to get gross gifts.
  • Step 2. Subtract any fully exempt gifts to get total net gifts.
  • Step 3. Subtract the ₱250,000 annual exemption to get the taxable amount.
  • Step 4. Multiply by 6%.
  • Step 5. Subtract any donor’s tax already paid earlier in the same year. What is left is the tax due on the current gift.1Supreme Court E-Library. Republic Act No. 10963 – TRAIN Law

One Gift During the Year

A donor gives property worth ₱500,000 in March. Net gifts total ₱500,000. Subtract ₱250,000 and you have ₱250,000 taxable. At 6%, the donor’s tax due is ₱15,000.

A Second Gift Later in the Same Year

The same donor gives another ₱200,000 in October. Cumulative net gifts for the year are now ₱700,000. Subtract the ₱250,000 exemption and the taxable base is ₱450,000. At 6%, the cumulative tax is ₱27,000. Because ₱15,000 was already paid in March, the donor owes ₱12,000 for the October gift.

This is why splitting a large gift into smaller ones does not lower the rate. The 6% always applies to the running total above ₱250,000, no matter how many separate transfers you make.

When the Property Is Conjugal or Co-Owned

If the donated property belongs to the conjugal partnership or absolute community of the spouses, each spouse is treated as a separate donor for their respective share. Each spouse files a separate BIR Form 1800 and computes donor’s tax independently.4Bureau of Internal Revenue. BIR Form No. 1800 Donor’s Tax Return The same rule applies to co-owned property: each co-owner files for their share.

The math changes considerably. A married couple donating conjugal property worth ₱600,000 reports ₱300,000 per spouse. After each applies the ₱250,000 exemption, each owes 6% on ₱50,000, or ₱3,000. Total: ₱6,000. If one spouse alone owned the same property, the tax on ₱600,000 would be ₱21,000.

Filing Deadline and What Late Costs You

The return is BIR Form 1800, and it must be filed within 30 days after the gift is made. The tax is due at the same time.4Bureau of Internal Revenue. BIR Form No. 1800 Donor’s Tax Return This is much tighter than the annual income tax calendar, and each gift starts its own 30-day clock. Payment goes to an Authorized Agent Bank in the donor’s Revenue District, or to the Revenue Collection Officer or authorized city or municipal treasurer where no such bank is available.5Bureau of Internal Revenue. BIR Form 1800 – Donor’s Tax Return Keep the validated return; you will need it to transfer property titles to the donee.

Miss the deadline and the BIR adds a 25% surcharge on the unpaid tax, plus 12% annual interest running from the original due date until the tax is paid in full. Compromise penalties may also apply.6Bureau of Internal Revenue. Penalties for Late Filing of Tax Returns On a ₱15,000 tax filed three months late, that is ₱3,750 in surcharge alone before interest, and interest keeps accruing until you pay.