Published — July 9, 2021
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 your own lawyer to address your legal concerns, if 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.
After reading Estate Tax Amnesty, Extended also read Taxation of Employee’s Benefits
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Estate tax is a tax on the right of the deceased person to transmit his estate to his lawful heirs at the time of death
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The estate tax is computed by multiplying the net estate with six (6) percent
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Estate Tax Amnesty is extended until June 14, 2023
E state Tax is a tax on the right of the deceased person to transmit his or her estate to his or 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. Rather, 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 heir.
How do you compute estate tax?
The law says:
The estate tax is computed by multiplying the net estate by six (6) percent. To be able to know the net estate, determine first the gross estate. The value of the gross estate of the decedent or the person who died includes the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated. It simply means the gross estate is the value of all the properties of the decedent or the person who died.
To arrive at the net estate, taxpayers simply have to subtract all the allowable deductions from the gross estate
How to pay the estate tax?
The law says:
After computing the estate tax, the estate tax return shall be filed under oath. The executor, administrator, or the heirs shall be responsible for the filing of the estate tax return. Estate tax returns showing a gross value exceeding Five Million Peso (Php 5,000,000.00) shall be supported with a statement duly certified by a Certified Public Accountant.
Take note that the estate tax return shall be filed within one year from the decedent’s death. The Commissioner of the Internal Revenue (Commissioner) or any Revenue Officer may however grant a reasonable extension not exceeding thirty (30) days, for filing the return.
As a general rule, the estate tax shall be paid at the time the return is filed. An extension of time to pay the estate tax shall be allowed when the Commissioner finds that the payment would impose an undue hardship upon the estate or any of the heirs. In such case, the extension shall not exceed five (4) years in case the estate is settled through courts, or two (2) years in case the estate is settled extrajudicially.
Also, relevant to the payment of the estate tax is the Tax Amnesty Act as amended by Republic Act No. 11569 (RA 11569) which was signed into law by President Rodrigo Roa Duterte on June 30, 2021. Under RA 11569, the lawful heirs and beneficiaries are allowed until June 14, 2023, to have the unpaid estate taxes settled at the rate of 6%, without penalty.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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