Tax Consequence of a Proposed Donation

February 5, 1980 BIR RULING NO. 008-80 Mrs. Betty Chua 651 Nueva Street, Galaxy Bldg. Binondo, Metro Manila M a d a m : This refers to your letter dated September 14, 1979 requesting a ruling on the tax consequence of a proposed donation of cash money in the sum of US$30,000.00 in your favor by your Auntie, Choi Tun Yee who, as represented, is a Chinese citizen and a resident of HongKong. In reply thereto, I have the honor to inform you that pursuant to Section 120 of the National Internal Revenue Code of 1977 as amended, a donor's gift tax shall be levied, assessed, collected and paid upon the transfer by any person, resident or non-resident, of property by gift. The said tax shall apply whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is real or personal, tangible or intangible. However, where the donor is a non-resident alien at the time of the donation, his real or personal property so transferred which are situated outside the Philippines shall not be included as part of his gross gift pursuant to Section 133 of the same Code. The gift tax is an excise on the transfer of property. It is not a tax on the property which is the subject of the gift, although it is measured by the value of that property. It is a tax on the donor's privilege to give. (See Bromley v. McCaughn, 280 U.S. 124 cited in p. 953, Chap. 19, Montgomery's Federal Taxes (1951-52) In view thereof, and considering that the donor is a Chinese citizen and resident of HongKong and therefore beyond the jurisdiction of the Philippine Government to tax, this Office is of the opinion as it hereby holds that the aforementioned proposed donation of US$30,000.00 in your favor shall not be subject to any Philippine tax. In this connection, it may be stated that should the proposed donation of US$30,000.00 materialize, you are required to submit to this Office, a copy of the Deed of Donation covering the aforesaid gift with the execution thereof, signature of the Chinese donor, notarial commission and signature of the Notary public acknowledging the instrument of donation duly authenticated by the Philippine Consulate General of the donor's residence. aisadc Very truly yours, RUBEN B. ANCHETA Acting Commissioner