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    Bsa2105 FS2021 Donorstax Da012

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    Abby Navarro
    Only citizens and resident aliens can claim a donor's tax credit for taxes paid on donations made in foreign countries. The procedure for computing this credit is the same as for an estate tax credit. The example shows Mr. A making donations of land in Manila, California, and Thailand, paying donor's taxes to the US and Thailand. His total taxable gifts are P5.75 million. His donor's tax is P345,000 but he gets a P227,500 credit for the foreign taxes paid, so he owes P117,500 in donor's tax.

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    Bsa2105 FS2021 Donorstax Da012

    Uploaded by

    Abby Navarro
    37 views1 page
    Only citizens and resident aliens can claim a donor's tax credit for taxes paid on donations made in foreign countries. The procedure for computing this credit is the same as for an estate tax credit. The example shows Mr. A making donations of land in Manila, California, and Thailand, paying donor's taxes to the US and Thailand. His total taxable gifts are P5.75 million. His donor's tax is P345,000 but he gets a P227,500 credit for the foreign taxes paid, so he owes P117,500 in donor's tax.

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    Only citizens and resident aliens can claim a donor's tax credit for taxes paid on donations made in foreign countries. The procedure for computing this credit is the same as for an estate tax credit. The example shows Mr. A making donations of land in Manila, California, and Thailand, paying donor's taxes to the US and Thailand. His total taxable gifts are P5.75 million. His donor's tax is P345,000 but he gets a P227,500 credit for the foreign taxes paid, so he owes P117,500 in donor's tax.

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    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    37 views1 page

    Bsa2105 FS2021 Donorstax Da012

    Uploaded by

    Abby Navarro
    Only citizens and resident aliens can claim a donor's tax credit for taxes paid on donations made in foreign countries. The procedure for computing this credit is the same as for an estate tax credit. The example shows Mr. A making donations of land in Manila, California, and Thailand, paying donor's taxes to the US and Thailand. His total taxable gifts are P5.75 million. His donor's tax is P345,000 but he gets a P227,500 credit for the foreign taxes paid, so he owes P117,500 in donor's tax.

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    BSA 2105 Atty. F. R.

    Soriano

    DONOR’S TAX CREDIT

    Who are allowed to claim donor’s tax credit


    Only citizens (whether residing in the Philippines or not at the time of the donation) or resident
    aliens are allowed to claim donor’s tax credit for donor’s tax paid in a foreign country.

    Procedure in computing donor’s tax credit for donor’s taxes paid to a foreign country
    The procedure in computing donor’s tax credit is the same as the procedure in computing estate tax
    credit.

    Illustration of donor’s tax credit


    Mr. A, a Filipino residing in Manila made the following donations in 2019: To B, his brother, a
    parcel of land located in Manila with a FMV of P2,500,000.00, with the condition that B shall assumed the
    mortgage thereon amounting to P500,000.00; to C his sister, a parcel of land located in California, USA,
    with a FMV of P3,000,000.00 for which Mr. A paid a donor’s tax of P180,000 ; and to D, his brother in
    Thailand, shares of stock with a FMV of P1,000,000.00, and for which Mr. A paid donor’s tax of P55,000.
    Net gifts – Philippines (P2,500,000-500,000) P 2,000,000
    Net gifts – USA 3,000,000
    Net gifts – Thailand 1. 1,000,000

    Aggregate net gifts 6,000,000


    Less: Exempt gifts 250,000

    Taxable gifts P 5,750,000

    Donor’s tax on taxable gifts (P5,750,000 x .06) P 345,000


    Less: Donor’s tax credit (Schedule 1) 227,500
    Donor’s tax still due P 117,500

    Note: Deduct from the donor’s tax based on the last taxable gifts during the year any donor’s
    taxes paid on prior gifts, if there is any, aside from the donor’s tax credit for the donor’s taxes paid
    in foreign countries.

    Schedule 1
    Limitation by country:
    USA
    Limitation
    P3,000,000/P6,000,000 x P345,000 = P 172,500
    Actual donor’s tax paid – USA 180,000
    Allowed P 172,500

    Thailand
    Limitation
    P1,000,000/P6,000,000 x P345,000 = P 57,500
    Actual donor’s tax paid - Thailand 55,000
    Allowed 55,000

    Total – Limitation by country (A) P 227,500

    Limitation by total:
    Limitation
    P4,000,000/P6,000,000 x P345,000 = P 230,000
    Actual donor’s taxes paid in USA and Thailand 235,000
    Allowed (B) P 235,000

    Tax credit (lower between A and B) P 227,500

    BSA2105-FS2021-DONOR’STAX-DA012 Page |1

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