Giving property away during your lifetime is not just a private matter. Anything a person gives away that would have been taxed as an inheritance if it had passed at death is instead taxed as a gift, and a return has to be filed and the tax paid at the time of the transfer. The steps below cover when the return is due, where it goes, and what the tax comes to.
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File a donor's tax return within thirty days of each gift
Every donor who makes a transfer by gift that is not exempt files a return under oath, setting out each gift made during the calendar year, the deductions claimed, any previous gifts made in the same year, the name of the donee, and any further information required by rules and regulations. The return is filed within thirty days after the date the gift is made, and the tax is paid at the time of filing.
Republic Act No. 8424, the National Internal Revenue Code of 1997, Section 103. Read the source →
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File it in the right place
The return goes to an authorized agent bank, or to 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. Where the donor had no legal residence in the Philippines, the return goes to the Office of the Commissioner; for gifts by a nonresident, it may be filed with the Philippine Embassy or Consulate for the country of the donor's domicile.
Republic Act No. 8424, the National Internal Revenue Code of 1997, Section 103. Read the source →
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Compute the tax at six percent above a P250,000 exempt threshold
The donor's tax for each calendar year is six percent (6%) computed on the basis of the total gifts in excess of P250,000 in exempt gifts made during the calendar year. The rate and threshold are the same whether the donee is a relative or a stranger. Contributions in cash or in kind to any candidate, political party or coalition for campaign purposes are governed by the Election Code and lie outside this chapter.
Republic Act No. 10963 (TRAIN), amending the NIRC, Section 99. Read the source →
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Know the penalty for filing or paying late
Failure to file on the prescribed date, filing with the wrong internal revenue officer, or failing to pay the tax when due, triggers a surcharge of twenty-five percent (25%) of the amount due. Willful neglect to file, or a false or fraudulent return, raises the surcharge to fifty percent (50%) of the tax or the deficiency tax.
Republic Act No. 8424, the National Internal Revenue Code of 1997, Section 248. Read the source →
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Interest also runs on any unpaid amount
Unpaid amounts additionally carry interest at the rate of double the legal interest rate for loans or forbearance of any money in the absence of an express stipulation as set by the Bangko Sentral ng Pilipinas, from the date prescribed for payment until the amount is fully paid.
Republic Act No. 10963 (TRAIN), amending the NIRC, Section 249. Read the source →
Timing here is measured from the date of each gift, not from the end of the year, and the exempt threshold is applied per calendar year rather than per donee. If you are planning a substantial transfer — a house to a child, a business share, a large cash gift — consult before signing so the paperwork side does not turn a straightforward gift into a penalty case.