Amendment on Inheritance and Gift Tax Rates

Repealed paragraph (4) of subsection (a) of section 89 of Commonwealth Act No. 466.

Imposes gift tax on the donee based on aggregate net gifts received over the years.
Tax rates depend on the beneficiary’s relationship to the donor, mirroring inheritance tax increments:
- Spouse, legitimate/recognized natural/adopted children, legitimate descendants/ascendants, adopter parents, recognized natural parent, or gifts for educational/charitable purposes:
  - Graduated rates from 1% to 8.5%, with exemption of gifts not exceeding PHP 3,000 for Filipino donees.
- Brothers or sisters and their descendants: Rates increased by 75%.
- Other relatives within the sixth degree: Rates increased by 150%.
- Relatives by affinity except spouse: Rates increased by 225%.
- Strangers: Rates increased by 400%.
Special provisions for domestic servants and trusted employees.
Gifts for public charitable purposes are taxed at the stranger’s rate.
Tax base adjusted for usufructuary interests or annuities.

For residents:
- Dowries or marriage gifts up to PHP 10,000 from parents to legitimate/recognized/adopted children before or within one year after marriage.
- Gifts to persons other than spouses and legitimate/recognized/adopted children, exempt up to PHP 1,000 or 5% of donor's prior year net income, capped at PHP 5,000.
- Gifts to or for the use of the National Government or its non-profit entities, including political subdivisions.
For nonresident non-citizens:
- Gifts to or for the use of the National Government or its non-profit entities.

Gift tax is due and payable on or before May 15 following the close of the calendar year.
Payment responsibility lies with donor or donee depending on circumstances.
Payment made to Collector of Internal Revenue or local treasurer according to residency.

"Gross estate" and "gift" include:
- Real estate and tangible personal property located in the Philippines.
- Franchises exercised in the Philippines.
- Shares, bonds, obligations in Philippine corporations and foreign corporations with 85% business in the Philippines.
- Shares or rights in Philippine partnerships, businesses, or industries.
- Intangible personal property of residents regardless of location.
Exemption from tax on intangible personal property for residents of foreign countries that do not impose similar taxes on Philippine citizens.
"Deficiency" defined as the amount by which taxes exceed those declared in tax returns, adjusted for prior assessments, abatements, or refunds.