How to Avail the Estate Tax Amnesty?

Photo from Unsplash | Jakub Żerdzicki

This article was originally published on June 1, 2022 and has been updated to reflect recent legal developments.

The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of a lawyer or you may directly contact and consult Alburo Alburo and Associates Law Offices to address your specific legal concerns, if there is any.

Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

---

AT A GLANCE:

Estate tax amnesty shall cover the estate of decedents who died on or before May 31, 2022, with or without assessments duly issued therefor, whose estate taxes have remained unpaid or have accrued as of May 31, 2022. (Section 4 of Republic Act No. 11956)

---

Upon the death of the decedent, succession takes place. Also, the right of the State to tax the privilege to transmit the estate vests instantly upon death.

 

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. For an heir or beneficiary to be able to transfer the decedent’s properties under his/ her name, the estate tax must first be settled. Failure to pay the estate tax on the prescribed period will subject the estate to penalty.

 

To give the taxpayer a reasonable tax relief for the unpaid estate taxes, Republic Act No. 11956 further amending the Tax Amnesty Act or Republic Act No. 11213 was passed. This extended the availability of Estate Tax Amnesty until June 14, 2025.

 

Who May Avail?

Estate tax amnesty shall cover the estate of decedents who died on or before May 31, 2022, with or without assessments duly issued therefor, whose estate taxes have remained unpaid or have accrued as of May 31, 2022. (Section 4 of Republic Act No. 11956) 

 

Who Are Excluded from Availing Estate Tax Amnesty?

The Estate Tax Amnesty shall not extend to the following:

 

1. Delinquent estate tax liabilities which have become final and executory and those covered by Tax Amnesty on Delinquencies; and
2. Properties involved in cases pending in appropriate courts:
   1. Falling under the jurisdiction of the Presidential Commission of Good Government;
   2. Involving unexplained or unlawfully acquired wealth under R.A. No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act, and R.A. No. 7080 or an Act Defining and Penalizing the Crime of Plunder;
   3. Involving violations of R.A. No. 9160, otherwise known as the Anti-Money Laundering Act, as amended;
   4. Involving tax evasion and other criminal offenses under Chapter II of Title X of the National International Revenue Code (NIRC) of 1997 , as amended; and
   5.  Involving felonies of frauds, illegal exactions and transactions and malversation of public funds and property under Chapters III and IV of Title VII of the Revised Penal Code. (Section 9 of Republic Act No. 11213) 

 

What is the Rate of the Estate Tax?

An estate tax amnesty rate of six percent 6% shall be imposed on each decedent’s total net taxable estate at the time of death without penalties at every stage of transfer of property.

 

The minimum estate amnesty tax for the transfer of the estate of each decedent shall be Five Thousand Pesos (P5,000.00).

 

What Composes the Gross Estate of the Decedent?

The gross estate of a decedent, shall be comprised of the following properties and interest therein at the time of his/her death, and such lifetime transfers includible in the gross estate:

1. Residents and Citizens – all properties, real and personal, tangible and intangible, wherever situated
2. Non-resident aliens – only real and personal properties situated in the Philippines

 

How is the Gross Estate Valued?

The properties comprising the gross estate of the decedent shall be valued, in general, based on the fair market value as of the time of death of the decedent. If the property is a real property, the fair market value shall be the higher value between the zonal value as determined by the Commissioner of Internal Revenue and the fair market value as shown in the schedule of values fixed by the provincial and city assessors.

 

In the case of shares of stock, the fair market value shall be:

1. Listed and traded in the stock exchange – The price at the time of death or the arithmetic mean between the highest and lowest quotation at a date nearest the date of death, if none is available on the date of death itself.
2. Not listed shares – The book value for common shares and par value for preferred shares as shown in the audited financial statement of the issuing corporation nearest to the date of death of the decedent.

 

Proprietary shares in any association, recreation or amusement club [such as golf, polo, or similar clubs) shall be valued using the bid price on the date of death or nearest to the date of death, if none is available on the date of death itself, as published in the newspaper of general circulation.

 

Cash in bank in local and for foreign currency shall be based on the peso value of the balance at the date of death.

 

Can there be Deductions from the Gross Estate?

Yes. For purposes of determining the Net Estate, the gross estate may be reduced by the deductions allowed by the estate tax law applicable at the time of death of the decedent.

 

Until When Can the Estate Tax Amnesty be Availed?

The application for estate tax amnesty shall be filed within June 15, 2023 or until June 14, 2025. (Section 6 of Republic Act No. 11956) 

 

What are the Mandatory Requirements?

The requirements provided for under Section 6 of Republic Act No. 11956  are as follows:

 

A. Mandatory Requirements [Original copy and two (2) photocopies of each document]:

1. Certified true copy of the Death Certificate (DC)
2. Taxpayer Identification Number (TIN) of decedent and heir/s
3. For “claims against the estate” arising from contract of loan, notarized promissory note, if applicable
4. Proof of the claimed “property previously taxed”, if any;
5. Proof of the claimed “transfer for public use”, if any; and
6. At least one (1) government-issued identification card (ID) of the executor/administrator of the estate, or if there is no executor or administrator appointed, the heirs, transferees, beneficiaries or authorized representatives.

 

B. For real property/ies, if any:

1. Certified true copy/ies of the transfer/original condominium certificate/s of title of real property/ies;
2. Certified true copy of the tax declaration of real property/ies, if untitled, including the improvements at the time of death or the succeeding available tax declaration issued nearest to the time of death of the decedent, if none is available at the time of death; and
3. Where declared property/ies has/have no improvement, Certificate of No Improvement issued by the assessor’s office at the time of death of the decedent.

 

C. For real property/ies, if applicable:

1. Certificate of Deposit/Investment Indebtedness owned by the decedent alone, or decedent alone, or decedent and the surviving spouse, or decedent jointly with others;
2. Certificate of Registration of vehicle/s and other proofs showing the correct value of the same;
3. Certificate of Stocks;
4. Proof of valuation of shares of stock at the time of death; or
5. Proof of valuation of other types of personal property.

 

D. Other requirements, if applicable:

1. If the person transacting/processing the transfer is the authorized representative, duly notarized original Special Power of Attorney (SPA) and/or, if one of the heirs is designated as executor/administrator, sworn statement;
2. If the document is executed abroad, certification from the Philippine Consulate or Apostille; or
3. If zonal value cannot be readily determined from the documents submitted location plan/vicinity map.

In the absence of any of the documents required above, the Commissioner of Internal Revenue may request for alternative documents, as may be deemed appropriate.

The application for payment of estate taxes shall be a distinct and separate process from the application for transfer of properties: Provided, however, That the proof of settlement of the estate, whether judicial or extrajudicial, shall only be required by the BIR for the issuance of the Electronic Certificate Authorizing Registration (ECAR) for the transfer of properties, and not for purposes of filing and payment of the estate taxes.

 

What is the Procedure for Availing the Estate Tax Amnesty?

The Estate Tax Amnesty Return (ETAR) shall be filed in the RDO having jurisdiction over the last residence of the decedent.

 

In case of a nonresident decedent, with executor or administrator in the Philippines, the return shall be filed with the RDO where such executor or administrator is registered or if not yet registered, at the executor or administrator’s legal residence.

 

In case of a non-resident decedent with no executor or administrator in the Philippines, the return shall be filed with RD0 No. 39- South Quezon City.

 

The duly accomplished and sworn ETAR (BIR FORM No. 2118-EA July 2021 (ENCS)), and Acceptance Payment Form (APF) (BIR Form No.0621-EA), together with the complete documents as enumerated in the ETAR, shall be presented to the concerned RDO for endorsement of the APF prior to the payment of the estate amnesty tax with the Authorized Agent Bank (AABs) or Revenue Collection Officers (RCOs). However, only the duly endorsed APF shall be presented to and received by the AAB or RCO.

 

After payment, the duly accomplished and sworn ETAR and APF with proof of payment, together with the complete documentary requirements shall be immediately submitted to the RDO in triplicate copies. Failure to submit the same within June 14, 2025  tantamounts to non-availment of the Estate Tax Amnesty and any payment made may be applied against the total regular estate tax due inclusive of penalties.

---

Click here to subscribe to our newsletter

Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 09175772207/ 09778050020.

All rights reserved.