06 Estate Tax Payable

Estate Tax Payable
TAX RATE
If the decedent died during or after the effectivity of RA 10963, otherwise known
as the "Tax Reform for Acceleration and Inclusion Act (TRAIN Law), the net estate of
every decedent, whether resident or non resident of the Philippines, shall be subject to
an estate tax rate of six percent (6%).

Determination of the Net Taxable Estate
Illustration 1 : Single Resident or citizen decedent
An unmarried Filipino decedent died leaving the

Solution : Computation of Estate tax due
following properties and possible deductions:
Note:
● No more deduction for funeral and judicial expenses, deemed covered with the increase of standard deduction
● Family home deduction limit is lower of actual amount and P10,000,000
Determination of the Net Taxable Estate
Illustration 2 : Married resident or citizen decedent
Mr. Rice, a resident alien, died leaving the following

Solution : Computation of Estate tax due
properties and estate deductions:
Note:
● Family home deduction limit is lower of actual amount and P10,000,000. In this
case you need to divided it by 2 because its a common property hence the 5.4M
Estate Tax Credit
Allowable deductions are deductions from the gross estate credit, on the other hand, is a
deduction from Philippine estate tax itself.
Estate Tax credit refers the taxpayer's right to deduct from the tax due the amount of tax it has
paid to a foreign country. The amount could be claimed as a deduction if such taxes pertain to
properties which are included in the gross estate for Philippine estate tax computation. This deduction
is allowed by law to lessen the harshness of international double taxation where the same estate is
being subject to both the foreign estate tax and the Philippine estate tax.
Note: Nonresident alien decedent are not entitled to estate tax credit.
Represented with the template below

Determination of Foreign tax credit
Step 1: Compute Limit 1 per foreign country
Lower of Actual tax paid, foreign country vs
Step 2: Compute Limit 2 per foreign country
Lower of Actual tax paid, ALL foreign country vs
Step 3: Choose lower amount between Limit 1 and Limit 2
Lower of Limit 1 vs Limit 2

Illustration
A nonresident citizen died in 2020 leaving the following
vs
Estate Tax Requirements
A. Estate Tax Return
The executor, administrator or any of the heirs shall file in duplicate an estate tax return
under oath, setting forth the following:
1. Value of gross estate at the point of death or in the case of non-resident alien, that part of his
gross estate situated in the Philippines
2. The deductions allowed from gross estate
3. Supplemental data which may be necessary to establish the correct tax
B. Certified Public Accountant (CPA) Certification

Where the value of the gross estate exceeds P5,000,000, the return shall be
accompanied by a statement certified by a Certified Public Accountant.
Contents of the statement:
1. Itemized assets of the decedent with their corresponding gross value at the time of death or, in
the case of a non-resident decedent, that part of his gross estate situated in the Philippines
2. Itemized deductions from gross estate
3. The amount of tax due whether paid or still due and outstanding
Deadline of filing the estate tax return
The estate tax return shall be filed within one year after the date of death.
Extension of filing
The Commissioner is authorized to grant in meritorious cases, a reasonable extension not
exceeding 30 days for filing the return.
Venue of filing
a. For resident decedents
The administrator or executor shall register the estate of the decedent and secure a new TIN therefor from
the RDO where the decedent is domiciled at the date of his death.
b. For non-resident decedents

Whether non-resident citizen or alien with executor or administrator in the Philippines, the estate tax return
shall be filed and a new TIN shall be secured from the RDO where such executor or administrator is registered.
If he is not registered, the return shall be filed and new TIN shall be secured form the RDO having
jurisdiction of his legal residence.
Payment of Estate Tax
The estate tax shall be paid at the time the return is filed following the rule, "pay as you file"
Insufficiency of cash to pay tax

If there is difficulty in paying the tax, the same may be settled by:
a.) Installment payment
The estate tax may be paid in installment within two years without the imposition of interest or
civil penalties. Subject to approval of the CIR, the estate tax may be paid as follows:
a.24 monthly payments n
b. 8 quarterly payments rlen
c. 4 semi-annual payments
d. 2 annual payments
Note: In case of lapse of two years without payment of the entire tax due shall be due and demandable
subject to the applicable penalties and interest reckoned from the prescribed deadline for filing the return and
payment of tax.
b.) Partial disposition of estate

Some of the properties of the estate may be conveyed for cash considerations to be used to settle the
estate tax due.
● A written request for partial disposition shall be approved by the BIR.
● notarized undertaking that the proceeds thereof shall be exclusively used for the payment of estate
tax due.
Estate Tax Return Preparation
` Mr. Bu Ang, single and a non-resident alien died of a heart attack in 2020 leaving the
following properties in favor of the heirs
Estate Tax Return
Preparation

06 Estate Tax Payable

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Estate Tax Payable

an estate tax rate of six percent (6%).

An unmarried Filipino decedent died leaving the

Mr. Rice, a resident alien, died leaving the following

Represented with the template below

Lower of Actual tax paid, foreign country vs

Step 2: Compute Limit 2 per foreign country

Lower of Actual tax paid, ALL foreign country vs

Step 3: Choose lower amount between Limit 1 and Limit 2

Lower of Limit 1 vs Limit 2

B. Certiﬁed Public Accountant (CPA) Certiﬁcation

b. For non-resident decedents

Insuﬃciency of cash to pay tax

b.) Partial disposition of estate

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