Description

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. It is not a tax on property. 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 beneficiary.

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Tax Form

BIR Form 1801 - Estate Tax Return

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Documentary Requirements

Mandatory Requirements [additional two (2) photocopies of each document]:

1. Certified true copy of the Death Certificate;

2. Taxpayer Identification Number (TIN) of decedent and heir/s;
3. Notice of Death (only for death prior to January 1, 2018) duly received by the BIR, if
gross taxable estate exceeds P20,000 for deaths occurring on January 1, 1998 up to
December 31, 2017; or if the gross taxable estate exceeds P3,000 for deaths occurring
prior to January 1, 1998;
4. Original copy of any of the following: a) Affidavit of Self Adjudication; b) Deed of
Extra-Judicial Settlement of the Estate, if the estate has been settled extra-judicially; c)
Court order if settled judicially; d) Sworn Declaration of all properties of the Estate;
5. A certified copy of the schedule of partition and the order of the court approving the same
within thirty (30) days after the promulgation of such order, in case of judicial settlement;
6. Proof of Claimed Tax Credit, if applicable;
7. Certified Public Accountant (CPA) Statement on the itemized assets of the decedent,
itemized deductions from gross estate and the amount due if the gross value of the estate
exceeds five million pesos (Php5,000,000.00) for decedent’s death on or after January 1,
2018 or two million pesos (Php2,000,000.00) for decedent’s death from January 1, 1998
to December 31, 2017;
 8. Certification of the Barangay Captain for the claimed Family Home;
9. Accounting of the proceeds of loan contracted within three (3) years prior to death of the
decedent;
10. Proof of the claimed "Property Previously Taxed";
11. Proof of the claimed "Transfer for Public Use";

For Real Properties, if any [additional two (2) photocopies of each document]:

1. Certified true copy/ies of the Transfer/Original/Condominium Certificate/s of Title of real

property/ies (front and back pages), if applicable;
2. Certified true copy of the Tax Declaration of real properties at the time of death, if
applicable;
3. Certificate of No Improvement issued by the Local Assessor's Office where declared
properties have no improvement;
4. Statement/Certificate of Aggregate Property Land Holdings issued by
City/Municipal/Provincial Assessor’s Office

For Personal Properties, if any [additional two (2) photocopies of each document]:

1. Original copy of Certificate of Deposit/Investment/Indebtedness owned by the decedent

and the surviving spouse, if applicable;
2. Certificate of Registration of vehicles and other proofs showing the correct value of the
same, if applicable;
3. Proof of valuation of shares of stock at the time of death, if applicable;

1. For shares of stocks not listed/not traded - Latest Audited Financial Statement of
the issuing corporation with computation of the book value per share
2. For shares of stocks listed/traded - Price index from the Philippine Stock
Exchange (PSE) /latest Fair Market Value (FMV) published in the newspaper at
the time of transaction
3. For club shares - Price published in newspapers on the transaction date or nearest
to the transaction date

4. Certificate of stocks, if applicable;

5. Proof of valuation of other types of personal property, if applicable;

Other Additional Requirements, if applicable:

 Duly Notarized Original Special Power of Attorney (SPA), if the person

transacting/processing the transfer is not a party to the transaction and/or Sworn
Statement if one of the heirs is designated as executor/administrator;
 Certification from the Philippine Consulate if document is executed abroad
 Location Plan/Vicinity map issued by the Local Assessor’s Office if zonal value cannot
be readily determined from the documents submitted
 Certificate of Exemption/BIR Ruling issued by the Commissioner of Internal Revenue or
his authorized representative, if tax exempt
  BIR-approved request for installment payment of Estate tax due
 BIR-approved request for partial disposition of Estate
 Such other documents as may be required by law/rulings/regulations/etc.

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Tax Rates

(The rate applicable shall be based on the law prevailing at the time of decedent’s death)

 Effective January 1, 2018 to present [Republic Act (RA) No. 10963]

There shall be an imposed rate of six percent (6%) based on the value of such NET ESTATE
determined as of the time of death of decedent composed of all properties, real or personal,
tangible or intangible less allowable deductions.

 Effective January 1, 1998 up to December 31, 2017 (RA No. 8424)

If the Net Estate is

Over But not Over The Tax Shall be Plus Of the Excess Over
P 200,000.00 Exempt
P 200,000.00 500,000.00 0 5% P 200,000.00
500,000.00 2,000,000.00 P 15,000.00 8% 500,000.00
2,000,000.00 5,000,000.00 135,000.00 11% 2,000,000.00
5,000,000.00 10,000,000.00 465,000.00 15% 5,000,000.00
10,000,000.00 1,215,000.00 20% 10,000,000.00
 Effective July 28, 1992 up to December 31, 1997 (Section 77 of the NIRC, as
amended (RA No. 7499)

If the Net Estate is

Over But not Over The Tax Shall be Plus Of the Excess Over
P 200,000.00 Exempt
P 200,000.00 500,000.00 5% P 200,000.00
500,000.00 2,000,000.00 P 15,000.00 8% 500,000.00
2,000,000.00 5,000,000.00 135,000.00 12% 2,000,000.00
5,000,000.00 10,000,000.00 495,000.00 21% 5,000,000.00
10,000,000.00 1,545,000.00 35% 10,000,000.00
 Effective January 1, 1973 to July 27, 1992 (Section 85 of the NIRC, as amended
(Presidential Decree No. 69)

If the Net Estate is

Over But not Over The Tax Shall be Plus Of the Excess Over
 P 10,000.00 Exempt - -
P 10,000.00 50,000.00 3% - P 10,000.00
50,000.00 75,000.00 P 1,200.00 4% 50,000.00
75,000.00 100,000.00 2,200.00 5% 75,000.00
100,000.00 150,000.00 3,450.00 10% 100,000.00
150,000.00 200,000.00 8,450.00 15% 150,000.00
200,000.00 300,000.00 15,950.00 20% 200,000.00
300,000.00 400,000.00 35,950.00 25% 300,000.00
400,000.00 500,000.00 60,950.00 30% 400,000.00
500,000.00 625,000.00 90,950.00 35% 500,000.00
625,000.00 750,000.00 134,700.00 40% 625,000.00
750,000.00 875,000.00 184,700.00 45% 750,000.00
875,000.00 1,000,000.00 240,950.00 50% 875,000.00
1,000,000.00 2,000,000.00 303,450.00 53% 1,000,000.00
2,000,000.00 3,000,000.00 833,450.00 56% 2,000,000.00
3,000,000.00 - 1,393,450.00 60% 3,000,000.00
 Effective September 15, 1950 to December 31, 1972 (Section 85 of the NIRC, as
amended (RA No. 579)

Estate and Inheritance Tax

If the Net Estate is

Over But not Over ESTATE INHERITANCE

0 5,000.00 Exempt Exempt
5,000.00 12,000.00 1.00% 2%
12,000.00 30,000.00 2.00% 4%
30,000.00 50,000.00 2.50% 6%
50,000.00 70,000.00 3.00% 8%
70,000.00 100,000.00 5.00% 12%
100,000.00 150,000.00 7.00% 14%
150,000.00 250,000.00 9.00% 16%
250,000.00 500,000.00 11.00% 18%
500,000.00 1,000,000.00 13% 20%
1,000,000.00 15% 22%
 Effective July 1, 1939 to September 14, 1950 (Section 85 of the NIRC, as amended
(Commonwealth Act No. 466)

Estate and Inheritance Tax

If the Net Estate is

Over But not Over ESTATE INHERITANCE

0 3000 Exempt
1.00%
3,000.00 10,000.00 1.00%
10,000.00 30,000.00 1.50% 2.00%
30,000.00 50,000.00 2.00% 3.00%
50,000.00 80,000.00 2.50% 4.00%
80,000.00 110,000.00 3.00% 5.00%
110,000.00 150,000.00 3.50% 6.00%
150,000.00 190,000.00 4.00% 7.00%
 190,000.00 240,000.00 4.50% 8.00%
240,000.00 290,000.00 5.00% 9.00%
290,000.00 350,000.00 5.50% 10.00%
350,000.00 420,000.00 6.00% 11.00%
420,000.00 500,000.00 6.50% 12.00%
500,000.00 600,000.00 7.00% 13.00%
600,000.00 720,000.00 7.50% 14.00%
720,000.00 850,000.00 8.00% 15.00%
850,000.00 1,000,000.00 8.50% 16.00%
1,000,000.00 1,200,000.00 9.00% 17.00%
1,200,000.00 1,500,000.00 9.50% 17.00%
1,500,000.00 10.00% 17.00%

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Procedures

 Who Shall File

The Estate Tax Return (BIR Form 1801) shall be filed in triplicate by:

1. The executor, or administrator, or any of the legal heir/s of the decedent, whether resident or
non-resident of the Philippines, under any of the following situations:

a. In all cases of transfers subject to estate tax;

b. Regardless of the gross value of the estate, where the said estate consists of registered or
registrable property such as real property, motor vehicle, shares of stock or other similar property
for which a clearance from the BIR is required as a condition precedent for the transfer of
ownership thereof in the name of the transferee; or

2. If there is no executor or administrator appointed, qualified, and acting within the Philippines,
then any person in actual or constructive possession of any property of the decedent.

Taxpayers who are filing BIR Form 1801 are excluded in the mandatory coverage from using the
eBlRForms (Section 2 of RR No. 9-2016)

 When and Where to File and Pay

The Estate Tax Return (BIR Form 1801) shall be filed within one (1) year from the decedent's
death. In meritorious cases, the Commissioner shall have the authority to grant a reasonable
extension not exceeding thirty (30) days for filing the return.

The return shall be filed with any Authorized Agent Bank (AAB) of the Revenue District Office
(RDO) having jurisdiction over the place of domicile of the decedent at the time of his death. If
the decedent has no legal residence in the Philippines, the return shall be filed with the Office of
the Commissioner (RDO No. 39, South Quezon City).

In case of a non-resident decedent with executor or administrator in the Philippines, the return
shall be filed with the AAB of the RDO where such executor/administrator is registered or is
domiciled, if not yet registered with the BIR.

When the return is filed with an AAB, taxpayer must accomplish and submit BIR-prescribed
deposit slip, which the bank teller shall machine validate as evidence that payment was received
by the AAB. The AAB receiving the tax return shall stamp mark the word “Received’’ on the
return and also machine validate the return as proof of filing the return and payment of the tax by
the taxpayer, respectively. The machine validation shall reflect the date of payment, amount paid
and transaction code, the name of the bank, branch code, teller’s code and teller’s initial. Bank
debit memo number and date should be indicated in the return for taxpayers paying under the
bank debit system.

Payments may also be made thru the epayment channels of AABs thru either their online facility,
credit/debit/prepaid cards, and mobile payments.

In case the available cash of the estate is insufficient to pay the total estate tax due, payment by
installment shall be allowed within two (2) years from the statutory date for its payment without
civil penalty and interest upon approved by the concerned BIR Official.

The due date on filing and payment of the return/tax shall depend on the applicable law at the
time of the decedent’s death.

 Extension to File and Pay

When the Commissioner of Internal Revenue finds that the 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. In such case, the amount in respect of which the extension is granted shall be paid on
or before the date of the expiration of the period of the extension, and the running of the Statute
of Limitations for assessment as provided in Section 203 of the National Internal Revenue Code
shall be suspended for the period of any such extension.

Where the taxes are assessed by reason of negligence, intentional disregard of rules and
regulations, or fraud on the part of the taxpayer, no extension will be granted by the
Commissioner.

If an extension is granted, the Commissioner of Internal Revenue or his duly authorized

representative may require the executor, or administrator, or beneficiary, as the case may be, to
furnish a bond in such amount, not exceeding double the amount of tax and with such sureties as
the Commissioner deems necessary, conditioned upon the payment of the said tax in accordance
in the terms of extension.
The application for extension of time to file the estate tax return must be filed with the Revenue
District Officer (RDO) where the estate is required to secure its Taxpayer Identification Number
(TIN) and file the tax returns of the estate. The application shall be approved by the
Commissioner or his duly authorized representative.

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Related Revenue Issuances

Revenue Regulations (RR) Nos. 2-2003, 6-2013, 6-2014; 12-2018

Revenue Memorandum Order (RMO) Nos. 26-82, 31-82, 15-2003; 35-2018
Revenue Memorandum Circular (RMC) Nos. 1-98, 34-2013
OPM-AS-APMD 2017-06-06
OPM-AS-APMD 2017-06-01

Related Laws

Commonwealth Act No. 466 – effective July 1, 1939

Republic Act No. 579 – effective September 15, 1950
Republic Act No. 6110 – effective August 4, 1969
Presidential Decree No. 69 – effective January 1, 1973
Presidential Decree No. 1773 – effective January 16, 1981
Presidential Decree No. 1994 – effective January 1, 1986
Republic Act No. 7499 – effective July 28, 1992|
Republic Act No. 8424 – effective January 1, 1998
Republic Act No. 10963 – effective January 1, 2018

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Codal Reference

Sec. 22 to 27 of the Tax Reform Acceleration and Inclusion Act (TRAIN Law)
Sec. 84 to Sec. 97 of the National Internal Revenue Code (NIRC) of 1997

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Frequently Asked Questions

1. What are included in gross estate?

A. For resident alien decedents/citizens:

 Real or immovable property, wherever located

 Tangible personal property, wherever located
 Intangible personal property, wherever located

B. For non-resident decedent/non-citizens:

 Real or immovable property located in the Philippines

 Tangible personal property located in the Philippines
 Intangible personal property - with a situs in the Philippines such as:
 Franchise which must be exercised in the Philippines
 Shares, obligations or bonds issued by corporations organized or constituted in the
Philippines
 Shares, obligations or bonds issued by a foreign corporation 85% of the business of
which is located in the Philippines
 Shares, obligations or bonds issued by a foreign corporation if such shares, obligations or
bonds have acquired a business situs in the Philippines (i.e. they are used in the
furtherance of its business in the Philippines)
 Shares, rights in any partnership, business or industry established in the Philippines

2. What are excluded from gross estate?

 GSIS proceeds/ benefits

 Accruals from SSS
 Proceeds of life insurance where the beneficiary is irrevocably appointed
 Proceeds of life insurance under a group insurance taken by employer (not taken out upon
his life)
 War damage payments
 Transfer by way of bona fide sales
 Transfer of property to the National Government or to any of its political subdivisions
 Separate property of the surviving spouse
 Merger of usufruct in the owner of the naked title
 Properties held in trust by the decedent
 Acquisition and/or transfer expressly declared as not taxable

3. What will be used as basis in the valuation of property?

The properties comprising the gross estate shall be valued based on their fair market value as of
the time of decedent’s death.
If the property is a real property, the appraised value thereof as of the time of death shall be,
whichever is the higher of –

1. The fair market value as determined by the Commissioner, or

2. The fair market value as shown in the schedule of values fixed by the provincial and city
assessors.

In the case of shares of stocks, the fair market value shall depend on whether the shares are listed
or unlisted in the stock exchanges. Unlisted common shares are valued based on their book value
while unlisted preferred shares are valued at par value. In determining the book value of common
shares, appraisal surplus shall not be considered as well as the value assigned to preferred shares,
if there are any. On this note, the valuation of unlisted shares shall be exempt from the provisions
of RR No. 6-2013, as amended.

For shares which are listed in the stock exchanges, the fair market value shall be 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.

The fair market value of units of participation in any association, recreation or amusement club
(such as golf, polo, or similar clubs), shall be the bid price nearest the date of death published in
any newspaper or publication of general circulation.

To determine the value of the right to usufruct, use or habitation, as well as that of annuity, there
shall be taken into account the probable life of the beneficiary in accordance with the latest basic
standard mortality table, to be approved by the Secretary of Finance, upon recommendation of
the Insurance Commissioner.(Sec. 5, RR No. 12-2018)

4. What are the allowable deductions for Estate Tax Purposes?

(Please note that the allowable deductions will vary depending on the law applicable at the time
of the decedent’s death)

 For dates of deaths occurring January 1, 2018 to present (RA No. 10963/TRAIN
Law)

A. For a citizen or resident alien:

1. Standard Deduction — An amount equivalent to Five million pesos (₱5,000,000.00)

2. Claims against the estate -

Requisites for Deductibility of Claims against the Estate –

 The liability represents a personal obligation of the deceased existing at the time of death;
 The liability was contracted in good faith and for adequate and full consideration in
money’s worth;
 The claim must be a debt or claim which is valid in law and enforceable in court; and
  The indebtedness must not have been condoned by the creditor or the action to collect
from the decedent must not have prescribed.

3. Claims of the deceased against insolvent persons where the value of the decedent’s interest
therein is included in the value of the gross estate

4. Unpaid mortgages, taxes and casualty losses

5. Property previously taxed - An amount equal to the value specified below of any property
forming part of the gross estate situated in the Philippines of any person who died within five (5)
years prior to the death of the decedent, or transferred to the decedent by gift within five (5)
years prior to his death, where such property can be identified as having been received by the
decedent from the donor by gift, or from such prior decedent by gift, bequest, devise or
inheritance, or which can be identified as having been acquired in exchange for property so
received:

“One hundred percent (100%) of the value, if the prior decedent died within one (1) year prior to
the death of the decedent, or if the property was transferred to him by gift, within the same
period prior to his death;

“Eighty percent (80%) of the value, if the prior decedent died more than one (1) year but not
more than two (2) years prior to the death of the decedent, or if the property was transferred to
him by gift within the same period prior to his death;

“Sixty percent (60%) of the value, if the prior decedent died more than two (2) years but not
more than three (3) years prior to the death of the decedent, or if the property was transferred to
him by gift within the same period prior to his death;

“Forty percent (40%) of the value, if the prior decedent died more than three (3) years but not
more than four (4) years prior to the death of the decedent, or if the property was transferred to
him by gift within the same period prior to his death; and

“Twenty percent (20%) of the value, if the prior decedent died more than four (4) years but not
more than five (5) years prior to the death of the decedent, or if the property was transferred to
him by gift within the same period prior to his death.

“These deductions shall be allowed only where a donor’s tax, or estate tax imposed under Title
III of NIRC was finally determined and paid by or on behalf of such donor, or the estate of such
prior decedent, as the case may be, and only in the amount finally determined as the value of
such property in determining the value of the gift, or the gross estate of such prior decedent, and
only to the extent that the value of such property is included in the decedent’s gross estate, and
only if in determining the value of the estate of the prior decedent, no deduction was allowable
under this item in respect of the property or properties given in exchange therefor. Where a
deduction was allowed of any mortgage or other lien in determining the donor’s tax, or the estate
tax of the prior decedent, which was paid in whole or in part prior to the decedent’s death, then
the deduction allowable this item shall be reduced by the amount so paid. Such deduction
allowable shall be reduced by an amount which bears the same ratio to the amounts allowed as
deductions under items (2), (3), (4), and (6) of this Subsection as the amount otherwise
deductible under this item bears to the value of the decedent’s estate. Where the property referred
to consists of two or more items, the aggregate value of such items shall be used for the purpose
of computing the deduction.

6. Transfers for Public Use

7. The Family Home - An amount equivalent to the current fair market value of the decedent’s
family home: Provided, however, that if the said current fair market value exceeds Ten million
pesos (₱10,000,000.00), the excess shall be subject to estate tax

If the family home is conjugal property and does not exceed (₱10,000,000.00), the allowable
deduction is one-half (1/2) of the amount only.

8. Amount Received by Heirs Under Republic Act No. 4917

Any amount received by the heirs from the decedent’s employer as a consequence of the death of
the decedent-employee in accordance with Republic Act No. 4917: Provided, that such amount is
included in the gross estate of the decedent.

9. Net share of the surviving spouse in the conjugal partnership or community property

B. For a non-resident alien:

1. Standard Deduction – An amount equivalent to Five hundred thousand pesos (₱500,000)

2. Losses and indebtedness -

2.1. Claims against the estate

2.2. Claims of the deceased against insolvent persons where the value of the decedent’s interest
therein is included in the value of the gross estate
2.3. Unpaid mortgages, taxes and casualty losses

3. Property previously taxed

4. Transfers for Public Use

5. Net share of the surviving spouse in the conjugal partnership or community property

 For deaths occurring January 1, 1998 to December 31, 2017 (RA No. 8424/NIRC of
1997)

A. For a citizen or resident alien:

1. Expenses, Losses, Indebtedness, and Taxes:

1. Actual funeral expenses (whether paid or unpaid) up to the time of interment, or an

amount equal to five percent (5%) of the gross estate, whichever is lower, but in no case
to exceed P200,000.
2. Judicial expenses of the testamentary or intestate proceedings.
3. Claims against the estate.
4. Claims of the deceased against insolvent persons where the value of the decedent’s
interest therein is included in the value of the gross estate; and,
5. Unpaid mortgages, taxes and casualty losses

2. Property previously taxed (Vanishing Deduction) (Section 86 (2) of the NIRC as amended by
RA No. 8424) - An amount equal to the value specified below of any property forming a part of
the gross estate situated in the Philippines of any person who died within five (5) years prior to
the death of the decedent, or transferred to the decedent by gift within five (5) years prior to his
death, where such property can be identified as having been received by the decedent from the
donor by gift, or from such prior decedent by gift, bequest, devise or inheritance, or which can be
identified as having been acquired in exchange for property so received:

One hundred percent (100%) of the value, if the prior decedent died within one (1) year prior to
the death of the decedent, or if the property was transferred to him by gift within the same period
prior to his death;

Eighty percent (80%) of the value, if the prior decedent died more than one (1) year but not more
than two (2) years prior to the death of the decedent, or if the property was transferred to him by
gift within the same period prior to his death;

Sixty percent (60%) of the value, if the prior decedent died more than two (2) years but not more
than three (3) years prior to the death of the decedent, or if the property was transferred to him by
gift within the same period prior to his death;

Forty percent (40%) of the value, if the prior decedent died more than three (3) years but not
more than four (4) years prior to the death of the decedent, or if the property was transferred to
him by gift within the same period prior to his death; and

Twenty percent (20%) of the value, if the prior decedent died more than four (4) years but not
more than five (5) years prior to the death of the decedent, or if the property was transferred to
him by gift within the same period prior to his death;

These deductions shall be allowed only where a donor’s tax or estate tax imposed was finally
determined and paid by or on behalf of such donor, or the estate of such prior decedent, as the
case may be, and only in the amount finally determined as the value of such property in
determining the value of the gift, or the gross estate of such prior decedent, and only to the extent
that the value of such property is included in the decedent’s gross estate, and only if in
determining the value of the estate of the prior decedent, no Property Previously Taxed or
Vanishing Deduction was allowable in respect of the property or properties given in exchange
therefor. (Section 6 & 7 of RR No. 2-2003)

3. Transfers for public use

4. The family home - fair market value but not to exceed P1,000,000.00

The family home refers to the dwelling house, including the land on which it is situated, where
the husband and wife, or a head of the family, and members of their family reside, as certified to
by the Barangay Captain of the locality. The family home is deemed constituted on the house
and lot from the time it is actually occupied as a family residence and is considered as such for as
long as any of its beneficiaries actually resides therein. (Arts. 152 and 153, Family Code)

5. Standard deduction – A deduction in the amount of One Million Pesos (P1,000,000.00) shall
be allowed as an additional deduction without need of substantiation.

6. Medical expenses – All medical expenses (cost of medicines, hospital bills, doctor’s fees, etc.)
incurred (whether paid or unpaid) within one (1) year before the death of the decedent shall be
allowed as a deduction provided that the same are duly substantiated with official receipts. For
services rendered by the decedent’s attending physicians, invoices, statements of account duly
certified by the hospital, and such other documents in support thereof and provided, further, that
the total amount thereof, whether paid or unpaid, does not exceed Five Hundred Thousand Pesos
(P500,000).

7. Amount received by heirs under RA No. 4917 - Any amount received by the heirs from the
decedent’s employer as a consequence of the death of the decedent-employee in accordance with
Republic Act No. 4917 is allowed as a deduction provided that the amount of the separation
benefit is included as part of the gross estate of the decedent.

8. Net share of the surviving spouse in the conjugal partnership or community property

B. For a non-resident alien:

1. Expenses, losses, indebtedness and taxes

2. Property previously taxed

3. Transfers for public use

4. Net share of the surviving spouse in the conjugal partnership or community property

No deduction shall be allowed in the case of a non-resident decedent not a citizen of the
Philippines, unless the executor, administrator, or anyone of the heirs, as the case may be,
includes in the return required to be filed in the Section 90 of the Code the value at the time of
the decedent’s death of that part of his gross estate not situated in the Philippines.
5. What does the term "Funeral Expenses" include?

The term "FUNERAL EXPENSES" is not confined to its ordinary or usual meaning. They
include:

1. The mourning apparel of the surviving spouse and unmarried minor children of the
deceased bought and used on the occasion of the burial;
2. Expenses for the deceased’s wake, including food and drinks;
3. Publication charges for death notices;
4. Telecommunication expenses incurred in informing relatives of the deceased;
5. Cost of burial plot, tombstones, monument or mausoleum but not their upkeep. In case
the deceased owns a family estate or several burial lots, only the value corresponding to
the plot where he is buried is deductible;
6. Interment and/or cremation fees and charges; and
7. All other expenses incurred for the performance of the rites and ceremonies incident to
interment.

Expenses incurred after the interment, such as for prayers, masses, entertainment, or the like are
not deductible. Any portion of the funeral and burial expenses borne or defrayed by relatives and
friends of the deceased are not deductible. Actual funeral expenses shall mean those which are
actually incurred in connection with the interment or burial of the deceased. The expenses must
be duly supported by official receipts or invoices or other evidence to show that they were
actually incurred. (Sec 6 (A)(1) of RR 2-2003)

6. What does the term "Judicial Expenses" include?

Expenses allowed as deduction under this category are those incurred in the inventory-taking of
assets comprising the gross estate, their administration, the payment of debts of the estate, as
well as the distribution of the estate among the heirs. In short, these deductible items are
expenses incurred during the settlement of the estate but not beyond the last day prescribed by
law, or the extension thereof, for the filing of the estate tax return. Judicial expenses may
include:

1. Fees of executor or administrator;

2. Attorney’s fees;
3. Court fees;
4. Accountant’s fees;
5. Appraiser’s fees;
6. Clerk hire;
7. Costs of preserving and distributing the estate;
8. Costs of storing or maintaining property of the estate; and
9. Brokerage fees for selling property of the estate.

Any unpaid amount for the aforementioned cost and expenses claimed under “Judicial Expenses”
should be supported by a sworn statement of account issued and signed by the creditor. (Sec 6
(A)(2) of RR 2-2003)