Question & AnswerQ&A (BATAS PAMBANSA BLG. 649)
The main purpose of Batas Pambansa Blg. 649 is to exempt donations of private agricultural lands and/or homelots to tenant-farmers, actual tillers, and/or occupants under the agrarian reform program from the payment of donor's tax.
Donees eligible for donor's tax exemption under this Act are tenant-farmers, actual tillers and/or occupants of the agricultural lands or homelots, as certified by the Ministry of Agrarian Reform.
The donation must be of private agricultural land or homelot not covered by Operation Land Transfer, made in favor of tenant-farmers, actual tillers and/or occupants, and must conform with the agrarian reform program, evidenced by a certification from the Ministry of Agrarian Reform.
The certification by the Ministry of Agrarian Reform confirms that the donee is a tenant-farmer, actual tiller, or occupant of the donated land and that the donation adheres to the agrarian reform program, which is necessary for the exemption from donor's tax.
No, donated lands and/or homelots under this Act cannot be further transferred except by hereditary succession or to the government; any other transfer will subject the donee to donor's tax liability.
In cases where the donated land is tenanted, the security of tenure of the tenant must not be violated.
Landowners covered by Operation Land Transfer or their successors who waive their right to receive compensation can also avail of the donor's tax exemption, and the tenant-farmer will be relieved of paying the amount waived.
Fifty percent of the fair market value of the donated property as determined in the tax declaration at least one year prior to donation can be deducted against the donor's taxable income. If the donation is related to waived compensation under OLT, the whole amount waived is deductible.
The Minister of Finance, in consultation with the Minister of Agrarian Reform and upon recommendation of the Commissioner of Internal Revenue, is authorized to promulgate the necessary rules and regulations for the effective implementation of the Act.