What is Estate Tax?
Description
Estate Tax is a tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs and beneficiaries at the time of death and on certain transfers, which are made by law as equivalent to testamentary disposition. It is not a tax on property. It is a tax imposed on the privilege of transmitting property upon the death of the owner. The Estate Tax is based on the laws in force at the time of death notwithstanding the postponement of the actual possession or enjoyment of the estate by the beneficiary.
Tax Form
BIR Form 1801 – Estate Tax Return
Documentary Requirements
1. Notice of Death duly received by the BIR, if gross estate exceeds P20,000 for deaths occurring on or after Jan. 1, 1998; or if the gross estate exceeds P3,000 for deaths occurring prior to January 1, 1998
2. Certified true copy of the Death Certificate
3. Deed of Extra-Judicial Settlement of the Estate, if the estate is settled extra judicially
4. Court Orders/Decision, if the estate is settled judicially;
5. Affidavit of Self-Adjudication and Sworn Declaration of all properties of the Estate
6. A certified true copy of the schedule of partition of the estate and the order of the court approving the same, if applicable
7. Certified true copy(ies) of the Transfer/Original/Condominium Certificate of Title(s) of real property(ies) (front and back pages), if applicable
8. Certified true copy of the latest Tax Declaration of real properties at the time of death, if applicable
9. “Certificate of No Improvement” issued by the Assessor’s Office declared properties have no declared improvement or Sworn Declaration/Affidavit of No Improvement by at least one (1) of the transferees
10. Certificate of Deposit/Investment/Indebtedness owned by the decedent and the surviving spouse, if applicable
11. Photo copy of Certificate of Registration of vehicles and other proofs showing the correct value of the same, if applicable
12. Photo copy of certificate of stocks, if applicable
13. Proof of valuation of shares of stocks at the time of death, if applicable
- For listed stocks – newspaper clippings or certification from the Stock Exchange
- For unlisted stocks – Audited Financial Statements duly certified by an independent certified public accountant with computation of fair market value per share at the time of death
14. Proof of valuation of other types of personal property, if applicable
15. Proof of claimed tax credit, if applicable
16. CPA Statement on the itemized assets of the decedent, itemized deductions from gross estate and the amount due if the gross value of the estate exceeds two million pesos, if applicable
17. Certification of Barangay Captain for claimed Family Home
18. Duly notarized Promissory Note for “Claims against the Estate” arising from Contract of Loan
19. Accounting of the proceeds of loan contracted within three (3) years prior to death of the decedent
20. Proof of the claimed “Property Previously Taxed”
21. Proof of claimed “Transfer for Public Use”
22. Copy of Tax Debit Memo used as payment, if applicable
Additional requirements may be requested for presentation during audit of the tax case depending upon existing audit procedures.
Tax Rates
Effective January 1, 1998 up to Present
If the Net Estate is
|
Over
|
But not Over
|
The Tax Shall be
|
Plus
|
Of the Excess Over
|
|
P 200,000.00
|
Exempt
|
|||
|
P 200,000.00
|
500,000.00
|
0
|
5 %
|
P 200,000.00
|
|
500,000.00
|
2,000,000.00
|
P 15,000.00
|
8 %
|
500,000.00
|
|
2,000,000.00
|
5,000,000.00
|
135,000.00
|
11 %
|
2,000,000.00
|
|
5,000,000.00
|
10,000,000.00
|
465,000.00
|
15 %
|
5,000,000.00
|
|
10,000,000.00
|
1,215,000.00
|
20 %
|
10,000,000.00
|
Effective July 28, 1992 up to December 31, 1997 (Section 77 of the NIRC, as amended (Republic Act No. 7499)
If the Net Estate is
|
Over
|
But not Over
|
The Tax Shall be
|
Plus
|
Of the Excess Over
|
|
P 200,000.00
|
Exempt
|
|||
|
P 200,000.00
|
500,000.00
|
5 %
|
P 200,000.00
|
|
|
500,000.00
|
2,000,000.00
|
P 15,000.00
|
8 %
|
500,000.00
|
|
2,000,000.00
|
5,000,000.00
|
135,000.00
|
12 %
|
2,000,000.00
|
|
5,000,000.00
|
10,000,000.00
|
495,000.00
|
21%
|
5,000,000.00
|
|
10,000,000.00
|
1,545,000.00
|
35 %
|
10,000,000.00
|
Effective January 1, 1973 to July 27, 1992 (Section 85 of the NIRC, as amended (Presidential Decree No. 69)
If the Net Estate is
|
Over
|
But not Over
|
The Tax Shall be
|
Plus
|
Of the Excess Over
|
|
P 10,000.00
|
Exempt
|
–
|
–
|
|
|
P 10,000.00
|
50,000.00
|
3%
|
–
|
P 10,000.00
|
|
50,000.00
|
75,000.00
|
P 1,200.00
|
4 %
|
50,000.00
|
|
75,000.00
|
100,000.00
|
2,200.00
|
5 %
|
75,000.00
|
|
100,000.00
|
150,000.00
|
3,450.00
|
10%
|
100,000.00
|
|
150,000.00
|
200,000.00
|
8,450.00
|
15 %
|
150,000.00
|
|
200,000.00
|
300,000.00
|
15,950.00
|
20%
|
200,000.00
|
|
300,000.00
|
400,000.00
|
35,950.00
|
25%
|
300,000.00
|
|
400,000.00
|
500,000.00
|
60,950.00
|
30%
|
400,000.00
|
|
500,000.00
|
625,000.00
|
90,950.00
|
35%
|
500,000.00
|
|
625,000.00
|
750,000.00
|
134,700.00
|
40%
|
625,000.00
|
|
750,000.00
|
875,000.00
|
184,700.00
|
45%
|
750,000.00
|
|
875,000.00
|
1,000,000.00
|
240,950.00
|
50%
|
875,000.00
|
|
1,000,000.00
|
2,000,000.00
|
303,450.00
|
53%
|
1,000,000.00
|
|
2,000,000.00
|
3,000,000.00
|
833,450.00
|
56%
|
2,000,000.00
|
|
3,000,000.00
|
–
|
1,393,450.00
|
60%
|
3,000,000.00
|
Effective September 15, 1950 to December 31, 1972 (Section 85 of the NIRC, as amended (Republic Act No. 579)
Estate and Inheritance Tax
If the Net Estate is
|
Over
|
But not Over
|
ESTATE
|
INHERITANCE
|
|
0
|
5,000.00
|
Exempt
|
Exempt
|
|
5,000.00
|
12,000.00
|
1.0%
|
2%
|
|
12,000.00
|
30,000.00
|
2.0%
|
4%
|
|
30,000.00
|
50,000.00
|
2.5%
|
6%
|
|
50,000.00
|
70,000.00
|
3.0%
|
8%
|
|
70,000.00
|
100,000.00
|
5.0%
|
12%
|
|
100,000.00
|
150,000.00
|
7.0%
|
14%
|
|
150,000.00
|
250,000.00
|
9.0%
|
16%
|
|
250,000.00
|
500,000.00
|
11.0%
|
18%
|
|
500,000.00
|
1,000,000.00
|
13%
|
20%
|
|
1,000,000.00
|
15%
|
22%
|
Effective July 1, 1939 to September 14, 1950 (Section 85 of the NIRC, as amended (Commonwealth Act No. 466)
Estate and Inheritance Tax
If the Net Estate is
|
Over
|
But not Over
|
ESTATE
|
INHERITANCE
|
|
0
|
3000.00
|
Exempt
|
1.0%
|
|
3,000.00
|
10,000.00
|
1.0%
|
|
|
10,000.00
|
30,000.00
|
1.5%
|
2.0%
|
|
30,000.00
|
50,000.00
|
2.0%
|
3.0%
|
|
50,000.00
|
80,000.00
|
2.5%
|
4.0%
|
|
80,000.00
|
110,000.00
|
3.0%
|
5.0%
|
|
110,000.00
|
150,000.00
|
3.5%
|
6.0%
|
|
150,000.00
|
190,000.00
|
4.0%
|
7.0%
|
|
190,000.00
|
240,000.00
|
4.5%
|
8.0%
|
|
240,000.00
|
290,000.00
|
5.0%
|
9.0%
|
|
290,000.00
|
350,000.00
|
5.5%
|
10.0%
|
|
350,000.00
|
420,000.00
|
6.0%
|
11.0%
|
|
420,000.00
|
500,000.00
|
6.5%
|
12.0%
|
|
500,000.00
|
600,000.00
|
7.0%
|
13.0%
|
|
600,000.00
|
720,000.00
|
7.5%
|
14.0%
|
|
720,000.00
|
850,000.00
|
8.0%
|
15.0%
|
|
850,000.00
|
1,000,000.00
|
8.5%
|
16.0%
|
|
1,000,000.00
|
1,200,000.00
|
9.0%
|
17.0%
|
|
1,200,000.00
|
1,500,000.00
|
9.5%
|
17.0%
|
|
1,500,000.00
|
10.0%
|
17.0%
|
Procedures
The heirs/authorized representative/administrator/executor shall file the estate tax return (BIR Form 1801) and pay the corresponding estate tax with the Authorized Agent Bank (AAB), Revenue Collection Officer (RCO) or duly authorized Treasurer of the city or municipality in the Revenue District Office having jurisdiction over the place of domicile of the decedent at the time of his death, pursuant to Section 90(D) of the Tax Code, as amended.
In case of a non-resident decedent, with executor or administrator in the Philippines, the estate tax return shall be filed with the AAB of the RDO where such executor/administrator is registered or is domiciled, if not yet registered with the BIR.
For non-resident decedent with no executor or administrator in the Philippines, the estate tax return shall be filed with the AAB under the jurisdiction of RDO No. 39 South Quezon City.
Payment of Estate Tax by installment – In case the available cash of the estate is not sufficient to pay its total estate tax liability, the estate may be allowed to pay the tax by installment and a clearance shall be released only with respect to the property, the corresponding/computed tax on which has been paid. (Section 9(F) of RR 2-2003)
One-Time Transaction (ONETT) taxpayers shall mandatorily use the eBIRForms in filing all of their tax returns. They may opt to submit their tax returns manually using the eBIRForms Offline Package in the Revenue District Office having jurisdiction over the place of domicile of the decedent at the time of his death or electronically through the use of the Online eBIRForms System. (Sec. 3(2) RR No. 6-2014)
Please note that the time of payment will vary depending on the law applicable at the time of the decedent’s death.
Deadlines
File the return within six (6) months from decedent’s death. However, the Commissioner may, in meritorious cases, grant extension not exceeding thirty (30) days.
The Estate Tax imposed shall be paid at the time the return is filed by the executor or administrator or the heirs. However, when the Commissioner finds that payment on the due date of the Estate Tax or of any part thereof would impose undue hardship upon the estate or any of the heirs, he may extend the time for payment of such tax or any part thereof not to exceed five (5) years, in case the estate is settled through the courts or two (2) years in case the estate is settled extra-judicially.
In all cases of transfers subject to tax, or where, though exempt from tax, the gross value of the estate exceeds Twenty Thousand Pesos (P 20,000), Section 89 of the National Internal Revenue Code of 1997 (Tax Code), as amended, provides that the executor, administrator or any of the legal heirs, shall send a written notice of death to the Commissioner within two (2) months after the decedent’s death or within a like period after an executor or administrator qualify as such. (part II, par.(1)of RMC No. 34-2013)
Please note that the time of filing will vary depending on the law applicable at the time of the decedent’s death.
Extension of Time of Filing:
When the Commissioner finds that the payment of the estate tax or of any part thereof would imposed undue hardship upon the estate or any of the heirs, he may extend the time for payment of such tax or any part thereof not to exceed five (5) years in case the estate is settled through the courts, or two (2) years in case it settled extra-judicially.
Where the request for extension is by reason of negligence, intentional disregard of rules and regulations, or fraud on the part of the taxpayer, no extension will be granted by the Commissioner.
If an extension is granted, the Commissioner or his duly authorized representative may require the executor, or administrator, or beneficiary, as the case may be, to furnish a bond in such amount, not exceeding double the amount, not exceeding double the amount of tax and with such sureties as the Commissioner deems necessary, conditioned upon the payment of the said tax in accordance in the terms of extension.
The request for extension shall be filed with the Revenue District Officer (RDO) where the estate is required to secure its TIN and file the estate tax return. The application shall be approved by the Commissioner or his duly authorized representative.