The Philippine Tax Whiz answers questions about donor’s tax, sending gifts to loved ones through balikbayan boxes, and value-added tax.
I work for a BPO company in Ortigas. This Valentine’s Day, I wish to give my mom a branded bag but I read in your previous article that even gifts are taxable. So, will my Valentine’s gift for my loved ones be subject to tax?
First, Happy Valentine’s Day to your mom. As long as the branded bag’s price does not exceed P100,000, you have nothing to worry about.
To know more about donor’s tax, you can visit www.bir.gov.ph or grab a copy of our Tax Komiks available in all DTI Negosyo Centers nationwide. You can also like our Facebook page (The Philippine Tax Whiz) for tax updates.
I am an OFW here in Singapore. If I send balikbayan boxes to my family in Davao, will it be subject to customs duties and taxes? I hope your reply won’t break our hearts as we are already afraid to send gifts to our families in the Philippines.
No. I will not break your heart, not on Valentine’s Day.
In fact, you can send your balikbayan boxes free of duties and taxes. This is in reference to Customs Administrative Order 5-2016, which states that sending of balikbayan boxes by Qualified Filipinos While Abroad (QFWA) to their families and relatives are duty- and tax-free.
I fully support your advocacy for genuine tax reform, especially if it means the rich pay more and the poor are protected and served. However, I heard that OFW remittances will be subject to value-added tax (VAT). Is it true? Even the VAT exemptions of senior citizens and persons with disabilities (PWDs) will also be removed.
No, that is false. OFW remittances will not be subject to VAT. I have read HB 4774 or the Tax Reform for Acceleration and Inclusion (TRAIN) Act.
Although the Department of Finance (DOF) initially proposed the removal of some VAT exemptions for senior citizens and PWDs, the version submitted to Congress, now adopted and authored by Quirino Representative Dakila Cua, doesn’t include this proposal anymore.
Our elderly and PWD loved ones will continue to enjoy the VAT-free privilege. Thanks to Marikina 2nd District Representative Miro Quimbo and Senator Sonny Angara who fought tooth and nail to protect their rights.
The recent earthquake in Surigao shocked me. I am a budding entrepreneur here in Manila, but our small business started making profit already. Thus, I have convinced my business partners to donate cash or anything that would help affected families in Surigao. Will I also pay tax for my donations? How can I avoid it without having problems with the Bureau of Internal Revenue (BIR)?
Yes. Your donations directly given to the victims, who are strangers or not related to you, will be subject to 30% donor’s tax.
Although you can claim this as “charitable contributions,” which is a deductible expense, you need to file BIR Form 1800 30 days after making your donation.
However, if you donate to a BIR-accredited foundation or through any government agency, your donation, cash or in kind, will be exempted from donor’s tax, but you have to secure a Certificate of Donation (BIR Form 2322).
This article was originally published on Rappler.