Estate Tax Amnesty

As the saying goes, there are only two constants in your life, “tax and death.”

Estate tax is the tax imposed on the properties left behind by the decedent/s. The Estate Tax is paid to the Bureau of Internal Revenue (BIR) before the proof of ownership on the properties are transferred to the heirs. The Estate Tax has to be paid within one (1) year from death. Failure to do so will merit a penalty from the BIR. There are instances that the BIR penalties may even be higher than the value of the property left behind by the decedent/s. Understanding this situation, the government passed a law waiving the penalties incurred should the heirs follow the requirements set by the law.

The Gist of Estate Tax Amnesty

The Tax Amnesty Act signifies that taxpayers are given a one-time grant to settle their tax obligations emanated from outstanding and unpaid tax liabilities with reasonable reliefs.

Coverage of the Amnesty

R.A. 11213, better known as the “Tax Amnesty Act”, covers the estate, with or without assessments validly issued and emanates unpaid or accrued estate tax, of a decedent/s who died on or before December 31, 2017.

Although, with the recent enactment of Republic Act (RA) 11569, the period to avail and file for an Estate Tax Amnesty and Return shall be extended up to June 14, 2023. Further, the Bureau of Internal Revenue’s (BIR) Revenue Regulation (RR) 6-2019 implemented the Republic Act No. 11213 (Tax Amnesty Act).

With regard to coverage, however, there are exceptions to the general rule – this is pursuant to R.A. 11569, following RR No. 17-2021 – which will be stated below:

• Delinquent Estate Tax liabilities that are deemed final and executory and liabilities covered by the Tax Amnesty on Delinquency such as undeclared estates or properties that are not subject to estate taxes and etc.;
• Properties involved in cases pending in their appropriate courts such as:
  • Falling under the jurisdiction of the Presidential Commission of Good Government;
  • 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;
  • Involving violations of R.A. No. 9160, otherwise known as the Anti-Money Laundering Act, as amended;
  • Involving tax evasion and other criminal offenses under Chapter II of Title X of the National Internal Revenue Code (NIRC) of 1997, as amended; and
  • 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.

The basis and rate imposed on each decedent’s total net taxable estate shall be six percent (6%) at the time of death of the decedent without penalties incurred during every stage of transfer. This is provided that the minimum Estate Amnesty Tax for the transfer of the estate to each decedent is at five thousand pesos (P 5,000.) – to simply put, the 6% amnesty rate is imposed on the net estate of a decedent, where in determining the net estate, deductions on the value of the gross estate at the time of the decedent’s death are allowed.

For the valuation of the Gross Estate:

• Real Properties – the higher value exhibited in the values fixed by the city assessors between the zonal value and the fair market value.
• Shares of Stock – For unlisted shares of stock, the preference and common shares shall follow its book value and its par value, respectively. For listed and traded shares of stock, it can be either a) the valuation shall be the price at the time of death, or b) the mean computed between the highest and the lowest quotation at the date nearest to the decedent’s death.
• Personal Properties – the Fair Market Value (FMV) at the time of the decedent’s death.

Place and Time of Filing:

To file for an Estate Tax Amnesty Return (ETAR), one must secure a revised BIR Form No. 2118 – EA, along with the necessary documents, to be filed by the legal heirs or executor within two (2) years from the effectivity of RR 6-2019. However, due to the recent amendment extending the filing of the Estate Tax Amnesty Return, the legal heirs or executors shall be given not later than June 14, 2023 to file for the return – this is pursuant to the recent Revenue Regulation (RR) No. 17-2021.

Failure to submit the necessary documents in availing the Estate Tax Amnesty shall be subject to the applicable estate Tax rates plus interest, penalties and surcharges.

With the new Estate Tax Amnesty Program, its implementation surely attracts and encourages taxpayers to avail its offered components. Not only does the program give leeway for payment but it also frees up the heavy burden that may arise from penalties emerging from unsettled and unpaid tax obligations and liabilities. In conclusion, this will also give the government a great chance to collect taxes without negatively affecting taxpayers – in turn, arriving at a great opportunity to raise the economy when needed.

Need further information and assistance in processing Estate Tax Amnesty?  Talk to our team at  FILEDOCSPHIL  to know more about the requirements and process. Call us today at  (+63) 917 149 2337 or send an email to  info@filedocsphil.com or simply message us through the live chat for more information.