Legal Logic and Technique

By: CALION, Alyk T.

To: Atty. Yasmine Lee Tadeo

CHANGE OF DONOR’S TAX RATE FROM 30% TO 6%

What is the reasoning?

The main reason is to simplify the payment of Donor’s Taxes. In the previous law, donor’s
tax goes up to 15% if the donor and the donee are related and 30% if they’re not. The
donor’s tax is now at 6% regardless of the relationship between donor and donee.

Further, Donor’s tax will be harmonized with Estate tax through the uniform tax rate of 6%
so it does not matter if the person passed away, donated a property, or simply wants to
transfer a property

Another reason is to encourage gratuitous transfers among Filipinos.

Did it hit the target?

Yes. Having lowered the tax rate and imposed uniform taxation on the gratuitous transfer
of properties, the government expects to incur a loss of revenue. But the goal is to offset
this with a more efficient land market and improved compliance among taxpayers.

Who will benefit from this change?

All donors donating to a stranger as well as possible donees. With the drastic change of the
tax applicable to donations to stranger from 30% to 6% more gratuitous transfers shall be
expected with less obligation on the part of both the transferor and transferee.