PHILIPPINES ESTATES TAX

Under Philippines laws, estate tax is defined as a tax on the right of right of the deceased person to transmit his estate to his lawful heirs and beneficiaries at the time of death and on certain transfers, which are made by law as equivalent to testamentary disposition. According to Bureau of Internal Revenue, estate tax is not a tax on property but rather imposed on the previlage of transmitting property upon the death of the owner.

It bears great emphasis that the Estate Tax Return must be filed within six (6) months from the death. The deadline may be extended by the Commissioner of the BIR, in meritorius cases, not exceeding thirty (30) days. It must be noted that the estate itself as assigned its own Tax Identification Number (TIN). The Estate Tax Return is filed with Revenue District Office (RDO) having jurisdiction over the place or residence of the decent at the time of his death. If the decendent has no legal residence in the Philippines, then the return can be filled with:

  • The office of the Revenue District Officer, Revenue District Office No. 39, South Quezon City: or
  • The Philippines Embassy or Consulate in the country where decendent is residing at the time of his death.

Furthermore, the estate tax shall be paid at the time the return is filed. However, upon request and if the Commissioner of the BIR 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. if an extension is granted, the BIR Commissioner may require a bond in such amount, not exceeding double the amount of tax, as it deems necessary.

The estate tax is based on the value of the net estate as follows:

  • If not over P200,000, it is exempt
  • If over P200,00 but not over P2,000.000, then tax is 5% of the excess over P200,000
  • If over P500,000 but not over P2,000,000, then tax is P15,000 Plus 8% of the excess over P500,000
  • If over P2,000,000 but not over P5,000,000, then tax is P135,000 Plus 11% of the excess over P2,000,000
  • If over P5,000,000 but not over P10,000.000, then tax is P465,000 Plus 15% of the excess over P5,000,000
  • If over P10,000.000, then tax is P1,215,000 Plus 20% of the excess over P10,000,000

The basis shall be the net estate. That means that there are allowable deductions on the estate. These deductions include funeral expenses, share of the surviving spouse, medical expenses incurred by the decedent within 1 year prior to his death, family home deduction of not more than P1,000,000.00 standard deduction of P1,000,000,000, among others. It is the best to consult with an accountant on this matter to determine the accurate estate tax.

For further inquiries, you may seek assistance by e-mailing us at info@peyralaw.com
You may visit as at Unit 1206 12F The Trade & Financial Tower 7th Avenue corner 32nd St.
St. Bonifacio Global City, Taguig City. 
You may also call us at +6329090900 and +6328186875.

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