Transfer Taxes

Transfer taxes are taxes imposed upon the gratuitous disposition of private properties or rights. Gratuitous transfer means that there's no burden impose nor requires consideration from transferee or recipient. With this, the transfer of ownership is free because of the absence of financial consideration. For this reason, gratuitous transfers are essentially donations.

Donation or gratuitous transfer may be take effect at the time of death of the donor (donation mortis causa subject to estate tax) or during the lifetime of both the donor and the donee (donation inter vivos subject to donor's tax). 

The opposite side of gratuitous transfer is onerous, one where the transferee gives consideration in return of the property or right(s) received. But, onerous transfers are subject to business taxes instead of transfer taxes.

The subject matter of a transfer tax is the privilege of the transferor to transfer property or rights. Even though the amount of transfer tax is based on net estate or net gifts, it shall not be construed as property tax. On this basis, transfer tax is classified as excise tax or privilege tax imposed on the act of passing the ownership of property and not on the value of the property or right.

References: New Civil Code of the Philippines, Title III Donation; Section 3;  RR 2-2003; Transfer and Business Taxation (Tabag/Garcia)