CHAPTER 15

Question 1

T or F:

Donations of property not within the Philippines by a resident alien is not subject to a Philippine donor’s tax.

Answer 1

FALSE

Question 2

T or F:

The property donated by a Filipino citizen that is located in another country may be subject to donor’s tax twice

Answer 2

TRUEFalse

Question 3

T or F:

Tax credit is allowed to nonresident alien on donation of property in a foreign country.

Answer 3

FALSE

Question 4

T or F:

Foreign donor’s tax credit is subject to limitations.

Answer 4

TRUE

Question 5

T or F:

Filing of donor’s tax return is not required for indirect donation.

Answer 5

FALSE

Question 6

T or F:

Donor’s tax is paid 30 days after the return is filed.

Answer 6

FALSE

Question 7

T or F:

The name of donee is not to be disclosed in the donor’s tax return for confidentiality.

Answer 7

FALSE

Question 8

T or F:

The Commissioner may require other information in the donor’s tax return.

Answer 8

TRUE

Question 9

T or F:

Donee-institution may use more than 30% of donation for administration purposes.

Answer 9

FALSE

Question 10

T or F:

To be exempt from donor’s tax on donation to qualified donee-institution, a donor engaged in business shall give a notice of donation on every donation worth at least P50,000.

Answer 10

TRUE

Question 11

It refers to the right of a Filipino citizen or resident alien to deduct foreign donor’s tax paid from their Philippine donor’s tax liability.

Answer 11

Answer: Foreign Donor’s Tax Credit

Question 12

The maximum amount of credit that can be claimed is limited to the lower between the actual foreign tax paid and this computed value.

Answer 12

Answer: Tax Credit Limit

Question 13

This amount is deducted from the total donor’s tax due in the Philippines to arrive at the donor’s tax still payable.

Answer 13

Allowed Tax Credit

Question 14

This is the formula used to compute the maximum tax credit per foreign country under Limitation (a).

Answer 14

(Net Gift in a Foreign Country / Total Net Gift) × Philippine Donor’s Tax

Question 15

This is the overall limitation for all tax credits combined, when donations are made to more than one foreign country.

Answer 15

(Total Net Gifts Abroad / Total Net Gifts) × Philippine Donor’s Tax

Question 16

If a Filipino citizen donates property located in Spain and the donor pays tax to Spain and the Philippines, this is applied to avoid double taxation.

Answer 16

Foreign Tax Credit

Question 17

If a donor is this type of person, they are not allowed to claim foreign donor’s tax as credit in the Philippines.

Answer 17

Non-resident alien

Question 18

This amount is allowed as an exemption from the total donations before computing the Philippine donor’s tax.

Answer 18

₱250,000

Question 19

Under the TRAIN law, this is the rate used to compute the donor’s tax on the net gifts after exemption.

Answer 19

6%

Question 20

The Philippine donor’s tax return must be filed within how many days from the date of donation?

Answer 20

30 days

Question 21

Computation:
A Filipino citizen donated the following: ₱3,500,000 worth of property in the Philippines, and ₱1,000,000 worth in Spain, where he paid ₱50,000 in donor’s tax. Compute the tax credit and donor’s tax still payable in the Philippines.

Total Net Gift:
Less Exemption:
Taxable Net Gift:
Philippine Donor’s Tax:
—————
Tax Credit Limit (Spain):
Allowed Tax Credit:
Donor’s Tax Payable:
Answer:

Answer 21

Solution:

Total Net Gift: 3,500,000 + 1,000,000 =4,500,000

Less Exemption: P250,000

Taxable Net Gift: 4,250,000

Philippine Donor’s Tax: 4,250,000 × 6% = P255,000

Tax Credit Limit (Spain):
(P1,000,000/4,500,000) × 255,000 = P56,667

Allowed Tax Credit Lower of P50,000 or P56,667 = P50,000

Donor’s Tax Payable: P255,000-P50,000= P205,000

Answer: P205,000