May 2020 ESTATE TAXATION Atty. C, Llamado GROSS ESTATE = Depends upon the citizenship and/or residence of the decedent: Tangible Personal | Intangible Personal Decedent Real Property Pevperiy Property Within] Without | Within | Without | Within [Without (1) Citizen oso © © © © Alien © © ) @ © @ | 3) Non-resident = | @ 3 © bg © bd Alien | | * (if there is reciprocity) Intangible personal property means incorporeal property which do not have any physical form, but represents rights and privileges. Examples include bank deposits, trademarks, shares of stock, patents, copyrights, bonds, notes, interest in a partnership, etc. Intangible Asset Situs 1)_Receivable (promissory note) Residence of the debtor 2) Bank deposit Location of the bank 3) Other intangible properties: a) Franchises, patents, copyrights, trademarks ‘Where property is used or exercised 'b)_Investment in partnership Where partnership is established ©) Shares of stock (including corporate bonds) (1) Domestic corporation Within the Philippines (2) Foreign corporation Without the Philippines Except: i) If> 85% of business is in the Philippines | Within the Philippines ii) If shares have acquired a business situs in the Philippines Within the Philippines PROPERTIES INCLUDED IN THE GROSS ESTATE OF A DECEDENT - _ Includes all properties, rights, and interests which the decedent owns at the time of his death; 1) Properties owned by the decedent and physically present in his estate at the time of death; 2) Interest (whether legal or beneficial) in property owned or possessed by the decedent at the time of death (Ex. usufructuary rights, leasehold rights); 3) Taxable Transfers ~ made during lifetime, but are in the nature of testamentary dispositions 1May 2020 (mortis causa in substance). Though he has transferred the property during his lifetime, he remains in control of the property, and the transfer is intended to take effect only at or after his death, a) Transfers in Contemplation of Death - Transfer is impelled by the thought of death. Ex. Donation mortis causa - donation which takes effect upon the death of the donor, and therefore partakes of the nature of a testamentary disposition. 1) No transfer of title or ownership to the donee; 2) The donor retains ownership (either legal or beneficial) and remains in full control of the property during his lifetime; 3) The transfer is revocable by the donor at will during his lifetime; and 4) The transfer is void if the donee dies first. | b) Revocable transfers; ‘The transferor reserves the power to alter, amend, revoke, or terminate the enjoyment of | the property by the transferee, or where such power is relinquished in contemplation of the decedent’s death, |= Whether or not such power is exercised during lifetime. If not exercised during lifetime, it is considered exercised at the time of death. c) Transfer with retention or reservation of certain rights over the income or enjoyment of the property transferred; - Transferor reserves his right to the income of the property until his death. = Transferor reserves his right to the possession or enjoyment of the property until his death. d) Property passing under a general power of appointment (“GPA”); = The decedent is the donee. - The (appointed) property comes from a donor (of the power) with a GPA for the donee (of the power). The donee is authorized to dispose of the property by exercising his power of appointment in designating any person who shall possess or enjoy the property and/or its income. - APA makes the appointed property, for all purposes, the property of the donee of the power of appointment. ©) Transfer for insufficient consideration. In all the taxable transfers above, if the transfer is a bona fide sale for adequate and full consideration in money or money’s worth, no value (of the property transferred) shall be included in the gross estate. However:May 2020 1) Ifthe transfer is not a bona fide sale for an adequate and full consideration in money or money's worth, there shall be included in the gross estate the excess of the FMV of the property at the time of death over the value of the consideration received by the decedent; Included in gross estate = FMV of property at time of death — Consideration received 2) If transfer is fictitious, the total value of the property at time of death shall be included in the gross estate of the decedent. f) Proceeds of Life Insurance Proceeds of life insurance taken out by the decedent upon his own life shall be included in his gross estate when. 1) His estate, his executor or administrator is the beneficiary; whether nor not the designation of the beneficiary is revocable; or 2) The beneficiary is any other person, but the decedent retains the power to revoke the designation. Note: When designation of the beneficiary is not clear, it is presumed to be revocable. Proceeds of life insurance are not included in gross estate when: 1) Beneficiary is other than the estate, his executor or administrator, and the designation is irrevocable; 2) Proceeds of a group insurance policy; 3) Benefits from the GSIS, SSS, accruing by reason of death. 4) Claims Against Insolvent Persons - receivables due from persons who are insolvent - shail be included in the gross estate at its full amount ~ bad debt deduction is taken for the uncollectible portion 5) Conjugal/community properties, if decedent was married. > the decedent's gross estate will include both his exclusive properties, and the conjugal/community properties of his marriage Note: Proceeds of life insurance are: ) Conjugel or community property if the money used to pay the premiums comes from the conjugal or community funds; b) Exclusive property of the decedent, if the money used to pay the premiums comes from the decedent's exclusive properties; ©) Partly conjugal or community property and partly exclusive property of the decedent if the premiums were paid partly from the conjugal funds and partly from the exclusive funds of the decedent, Note: Exclusive propeity of the surviving spouse is EXCLUDED from the decedent's gross estate,May 2020 PROPERTIES OF SPOUSES = the extent of the gross estate of the decedent shall depend upon the property relations between the decedent and his/her spouse. Property Regimes: 1) Absolute Community of Property (“ACP”); 2) Conjugal Partnership of Gains (“CPG”); 3) Separation of Property The spouses may, in a pre-nuptial agreement (marriage settlement), agree upon the regime that shall govern their property relations, However, in the absence of a marriage settlement, the property relations shall be governed by: a) the CPG for those married before August, 3, 1988; or b) the ACP for those married on or after August 3, 1988. What is the CPG? Exclusive Property of Husband Exclusive Property of Wife 1) Property owned before 1) Property owned before marriage; marriage; 2) Property acquired during the 2) Property acquired during the marriage by gratuitous title (by marriage by gratuitous title (by inheritance or donation); inheritance or donation); 3) Property acquired with the 3) Property acquired with the exclusive money of the exclusive rhoney of the wife, or husband, or exchanged for exchanged for exclusive exclusive property of the property of the wife. husband. 4) Property designated as exclusive 4) Property designated as in a marriage settlement. exclusive in a marriage settlement, Husband Wife ——" Conjugal Properties 1) Properties acquired by onerous title using the common funds (even if the property is only for one of the spouses); 2) Properties obtained from the labor or work of the spouses during marriage; 3) Properties acquired by chance such as winnings from gambling or betting. (However, losses therefrom shall be borne exclusively by the loser-spouse). 4) Fruits (natural or civil) and income of the conjugal properties; 5) Fruits (natural or civil), and income of the exclusive properties of each spouse;Mi What is the ACP? lay 2020 Exclusive Property of Husband 1) Property equired during the marriage by gratuitous title (by inheritance or donation) UNLESS the donor or testator expressly provides that the property shall form part of the community property 2) Fruits and income of exclusive 4) Proper 5) properties; Properties for the personal or exclusive use of the husband except jewelry acquired before marriage by the husband who has legitimate descendants from a _ previous marriage. Property designated as exclusive in a marriage settlement. )) » 3d 4) Exolusive Property of Wife Property acquired during the marringe by gratuitous title (by inheritance or donation) UNLESS the donor or testator expressly provides that the property shall form part of the community property Fruits and income of exclusive properties; Properties for the personal or exclusive use of the wife except jewelry; Property acquired before marriage by the wife who has legitimate descendants from a previous marriage, Property designated as exclusive in a marriage settlement. Husband Wife ae eA Community Properties (4) above), 2) ALL properties acquired thereafter. 3) Fruits and income of community properties 1) ALL properties owned by the spouses at the time of the marriage (exceptMay 2020 ‘ACQUISITIONS OR TRANSMISSIONS WHICH ARE NOT INCLUDED IN THE GROSS ESTATE OF ADECEDENT!' (a) Merger of the usufruct in the owner of the naked title to the property; (b) Fideicommissary substitution — where the inheritance or legacy is delivered or transmitted by the fiduciary heir or legate to the second heir (fideicommissary), (©) The transmission from the first heir, logatee, or donee in favor of another beneficiary, in accordance with the desire of the predecessor; Note: In the three (3) cases, there is actually one transfer involved. Such transfers were already subjected to estate tax, and taxing these would amount to double taxation. (d) All bequests, devises, legacies, or transfers to social welfare, cultural, and charitable institutions, no part of the income of which inures to the benefit of any individual. Provided, however, that not more than 30% of the said bequests, devices, legacies, or transfers shall be used by such institutions for administration purposes. Other Exemptions from the estate tax: (e) Proceeds of life insurance and benefits received by members of the Government Service Insurance System (“GSIS”);? () Benefits received by members trom the Social Security System by reason of death;? (g) Amounts received from the Philippine and United States governments for war damages;4 (h) Amounts received from the United States Veterans Administration;’ (i) Retirement benefits of employees of private firms from private pension plans approved by the BIR; j) Intangible personal property located in the Philippines of a non-resident alien decedent under the principle of reciprocity;$ and (k) Personal Equity and Retirement Account (“PERA”) assets shall not be considered assets of the Contributor for purposes of estate taxes,” Furthermore, Qualified PERA Distributions received by the Contributor, or in case of the death of the Contributor, received by his heirs or beneficiaries, whether in a lump sum or pension for a definite period or lifetime pension, shall not be subject to estate tax. ' See. 87, NIRC. ?P.D. No. 1146, }R.A.No, 1161, as amended, ‘RA, No, 227. *RA.No, 360. * Sec, 104, NIRC, 7 R.A, No, 9505 "Sec. 10, RR No, 17-2011,May 2020 (I) Proceeds of life insurance when the beneficiary is not the estate, the executor, or the admini r, and the designation is irrevocable. (m) Bank deposit in the name of the decedent on which the 6% estate tax has been withheld ! and remitted by the bank to the BIR upon withdrawal by the heirs. VALUATION OF THE GROSS ESTATE Properties shall be valued at the time of death of the decedent Property ‘Valuation [Usafhuct, use, habitation, | Value shall be based on the probable life of the beneficiary in | | annuity accordance with the latest Basic Standard Mortality Table | | approved by the Department of Finance roperty FMV which is the higher of the zonal value or the assessor's value ‘Personal Property Generally, FMV atthe time of death of the decedent Stocks listed in the stock | Average of the lowest and highest quotes on the valuation date exchange (date of death) or day nearest to the valuation date. | [Stocks not listed inany | For common shares: Book value on the valuation date (date of local exchange | death), or on the date nearest the valuation date. For preferred shares, par value. | Notes; accounts FMV is the discounted amount of the unpaid principal plus interest. receivable Units of participation in | FMV 1s the bid price on the date of death or nearest the date of any association, death published in any newspaper or publication of general recreation, or amusement | circulation. club (also called | rroprieiary shares) = ‘Cash in bank in local or | The peso value of the balance at the date of death. | foreign currencMay 2020 DEDUCTIONS FROM THE GROSS ESTATE 1. ORDINARY DEDUCTIONS A) CLUT (Claims, Losses, Unpaid Mortgages, Taxes, etc.) 1) Claims against the estate ~ consist of the bona fide unpaid personal obligations of the decedent of a pecuniary nature, These can arise from contract, tort, or by operation of law. These must be incurred in good faith by the decedent during his lifetime, and can be enforced” against the estate by his creditors. These include personal obligations of the decedent at the time of his death except unpaid obligations incurred incidental to his death such as funeral or medical expenses. (A)If the claim arises from the purchase of goods or services by the decedent, the following must be submitted: 1) Documents evidencing the purchase (invoices, receipts, statements of accounts); 2) Creditor’s certification as to the unpaid balance of the debt, including interest; and 3) Certified true copy of the latest audited balance sheet of the creditor showing the unpaid balance of the decedent. (B) If the claim is in the form of a loan, the following requirements must be complied with: 1) the instrument must be notarized except if it is not the business practice of the financial institution-lender to notarize such instruments; 2) notarized certification from the creditor as to the unpaid balance of the debt, inclusive of interest; 3) proof of financial capacity of the creditor to lend the amount at the time the loan was granted; 4) if the loan was contracted within 3 years prior to the death of the decedent, a statement under oath executed by the administrator/executor of the estate stating the disposition of the proceeds of the loan. (C) Where settlement of the estate is made through the courts: 1) Documents filed with the court evidencing the claims; 2). The court order approving the claims; 3) The documents in (A) or (B) above. 2) Claims against insolvent persons = must first be included in the gross estate; = portion or amount that cannot be collected from the decedent’s debtor is deductible from the gross estate. 3) Unpaid mortgages — the unpaid mortgage or indebtedness is deductible from the gross estate provided that the decedent's interest in the property, gross of the mortgage, is included in the gross estate. ° Must not have been forgiven by the creditor, or the action to collect must not have prescribed.May 2020 - if the loan is an accommodation loan where the loan proceeds went to another person, the value of the unpaid loan must be included in the gross estate as a receivable. 4) Income taxes and property taxes ~ the following taxes can be deducted from the gross estate: a) Unpaid income taxes on income due or received before the death of the decedent; by) Real property taxes which have accrued prior to the death of the decedent. Note: Real property taxes accrue at the beginning of the year. 5) Casualty Losses - on account of mishaps, accidents, casualties, acts of God, robbery, theft, embezzlement can be deducted provided: a) The loss is not compensated for by insurance or otherwise; b) The loss is not claimed as a deduction in an income tax return; c) The loss must occur not later than the last day for payment of the estate tax (generally, within 1 year after death). B) TRANSFERS for PUBLIC USE 1) Transfers made to the government or any political subdivision for public purposes; or 2). Transfers to social welfare, cultural, and charitable institutions, provided: a) No part of its net income inures to the benefit of any individual; and b) <30% of the bequest, devise, or legacy is used for administrative purposes. Note: No purely religious organization C) VANISHING DEDUCTION (Property Previously Taxed - “PPT") To minimize double taxation on same property (located in the Philippines) which was previously received by the decedent as a donation or inheritance. 1. Conditions for Allowance of the Vanishing Deduction (a) The present decedent must have acquired the property by inheritance or donation within five (5) years prior to his death; (b) The property acquired formed a part of the gross estate of the prior decedent, or of the taxable gifl of the donor; (c) The estate tax on the prior estate, or the donor's tax on the gift must have been paid; and (d) The estate-of the prior decedent has not previously availed of the vanishing deduction. 2. Percentage of Vanishing Deduction The rates depend on the interval between:May 2020 (a) The death of the present decedent, and the death of the prior decedent ifthe propeny previously taxed (“PPT”) was acquired by inheritance, or (b) The death of the present decedent, and the date of the gift, 1f the PPT’ was sequired by donation. Not More Than 1 year 2 years 3 years 4 years 4 years 5 years 5 years XXX 3. Procedure in Computing the Vanishing Deduction (a) Determine the lower value of the PPT - FMV of the PPT in the estate of the prior decedent, or FMV of the PPT in the estate of the present decedent, if PPT was inherited. FMV of the PPT at the date of donation, or FMV of the PPT in the estate of the present decedent if the PPT was donated. (b) Deduct any mortgage or lien on the PPT which was paid by the present decedent, where such mortgage or lien was used as a deduction in the computation of the estate tax of the prior decedent, or as a deduction in determining the donor's tax. ‘Net Value of PPT (©) Prorate the ordinary deductions and subtract from the net value: Net Value of PPT x Ordinary Deductions Gross Estate (excluding the Van. Ded.) Final Basis (4) Apply the rate of Vanishing Deduction Rate (based on number of years interval) Vanishing Deduction Percentage 100% 80% 60% 40% 20% XXX, P xxx (ox) Poe Gox) Po xxxMay 2020 { | Il. SPECIAL DEDUCTIONS 1 Deducted only after the ordinary deductions have been deducted from the gross estate, A) FAMILY HOME Must be included in the gross estate. ~The deduction is only for one family home which must be the actual residential home of the decedent as certified to by the barangay captain. Lov of: TMV of the family home; a) If family home is exclusive property of the decedent: FMV b) If family home is conjugal property: FMV/2 c) If family land is exclusive while the family house is conjugal: FMV of land + FMV of house/2 d) If family land is conjugal while family house is exclusive: FMV of land/2. + FMV of house OR 2) P10,000,000. B) STANDARD DEDUCTION 1) 5,000,000 for estates of citizens and resident aliens; 500,000 for estates of non- resident aliens. 2) Substantiation not required. ) AMOUNTS RECEIVED BY HEIRS UNDER R.A. NO. 4917 ‘Amounts/benefits received by the heirs from the decedent's employer as a consequence of his death. Such benefits must first be included in the gross estate before the same can be deducted. Ill, SHARE OF THE SURVIVING SPOUSE IN THE NET CONJUGAL PROPERTIES ‘Share of the surviving spouse is not subject to estate tax and must therefore be deducted from the gross estate of the decedent. Amount of deduction = [Conjugal properties less obligations chargeable to such properties (conjugal deductions)] divided by 2 nMay 2020 SUMMARY OF DEDUCTIONS resident aliens? | | What deductions are available against the estates of citizens, residents, or non- G. Share of surviving spouse in conjugal net assets = Deduction Citizens/Resident [Non-Resident | Aliens __Alten A. CLUT . 1) Claims against the estate Vv Vv 2) Claims against insolvent persons v Vv 3) Unpaid mortgages y 4 4) Taxes Vv Vv 5) Losses v v (B. Transfer for public use wv C. Vanishing Deduction Vv |D. Family Home V E. Standard Deduction 3, _Y(P5.0 M) V(P0.5M) F. Amounts received by heirs under RA 4917, v & *For the estate of a no ident alien, the allowable CLUT deduction shall be prorated based on the size of the gross estate in the Philippines relative to his entire worldwide gross estate, as follows Philippine Gross Estate. = x CLUT Worldwide Gross Estate Il. If the decedent was married, how do we allocate the deductions between the exclusive and conjugal properties? Exclusive | _ Conjugal/ Properties | Community Properties Total Gross Estate A. CLUT 1) Claims against the estate 2) Claims against insolvent persons 3) Unpaid mortgages 4) Taxes 5) Losses a2eeee B, Transfer for public use C. Vanishing Deduct nm Net estate before Special Deductions ele] eeeee SOOKK XXX D. Family Home al E. Standard Deduction F. Amounts received by heirs under RA 4917 G. Share of surviving spouse in conjugal net assets «|e NET ESTATE NET ESTATE ESTATE TAX RATE - 6% 12May 2020 CREDIT FOR FOREIGN ESTATE TAX PAID Available only to estates of citizen or resident alien decedents = Subject to Limits Limits: (A) Net Estate (per Foreign Country) x Philippine Estate Tax Entire Net Estate (B) Net Estate (in all Foreign Countries) x Philippine Estate Tax Entire Net Estate Rules: 1) If there is only one (1) foreign country, only Limit (A) is used. 2) If there are > two (2) foreign countries, use both Limits Formula: Estate tax paid in Country) Limit A (Country 1) pj awe a Estate tax paid in Country 2 Limit A (Country 2) ify omer Limit (4) Lower = Credit Sum of este taxes pad in Countries 1 and 2 i Lower= Limit (B) Limit BMay 2020 Estate Tax Return The estate tax return is required to be filed in the following cases: a) When the transfer is subject to estate tax; or b) When the gross estate includes properties for which clearance from the BIR (Certificate Authorizing Registration (CAR)) is needed before transfer of ownership to the transferees/heirs can be effected (regardless of the value of the gross estate). Who files? The executor or administrator, or any of the legal heirs Time of filing? Within 1 year from death of decedent. Time of filing can be extended for another 30 days or less in meritorious cases. The application for the extension of time to file the estate tax return must be filed with the Revenue District Office (“RDO”) where the estate is required to secure its TIN and file its tax returns. This request shall be approved by the Commissioner or his duly authorized representative, Where filed? 1) If decedent was a resident ~ the administrator or executor shall register the estate and secure a new TIN therefor from the RDO where the decedent was domiciled at the time of his death, The administrator/executor shall file the estate tax return with: (a) an Authorized Agent Bank (“AAB"), or (b) Revenue District Officer or Collection Officer having jurisdiction over the place where the decedent was domiciled at the time of death, or (©) duly authorized Treasurer of the city or municipality in which the decedent was domiciled at the time of his death, whichever is applicable following prevailing rules and procedures on collection. 2) If decedent was a non-resident (whether citizen or alien) ~ the TIN for the estate shall be secured from, and the estate tax return shall be filed with: a) With an AAB, or with the RDO where the executor/administrator is registered. b) If the executor/administrator is not registered with the BIR, with an AAB or with ‘the RDO having jurisdiction over the legal residence of the executor/administrator. c) If there is no executor/administrator, with the Office of the Commissioner (RDO No, 39, South Quezon City). 3) In case of “No Payment Return”, the return shall be filed with the Revenue District Office (“RDO”) having jurisdiction over the place of domicile of the decedent at the time of 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),! "RMC No. 54-2019, 4May 2020 Contents of the Estate Tax Return 1) Value of the gross estate; : 2) Gross estate outside the Philippines for non-resident alien decedents; 3) Deductions allowed and taken; 4) Other supplemental data; vn : 5) For estate tax returns showing a gross value exceeding PS Million, a statement certified by a CPA as to the assets, deductions, and tax due. Payment of the Estate Tax When paid? Estate tax is paid at the time the retum is filed (pay as you file). Extension of time to pay When the Commissioner finds that the payment on the due date of the estate tax or 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 extrajudici: The application for extension of time to pay the estate tax shall be filed with the RDO where the estate is required to seoure its TIN and file its estate tax return. This request shall be approved by the Commissioner or bis duly authorized representative. ‘The Commissioner may require the executor, or administrator, or beneficiary, as the case may be, 1o furnish a bond in such amount, not exceeding double the amount of the tax, conditioned upon the payment of the said tax in accordance with the terms of the extension. Any amount paid afier the statutory due date of the tax, but within the extension period, shall be subject to interest but not to surcharges. Payment by Installment In case of insufficiency of cash for the immediate payment of the total estate tax due, the estate may be allowed to pay the estate tex due through the following options: (1) Cash Installment a. The estate tax retum shall be filed within one (1) year from the date of decedent's destin; >. The cash installiments shall be made within two (2) years from the date of filing of the estate tax return; !! 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 (Sec. 91(C), NIRC as inserted by R.A. No. 10963). 15May 2020 c. The frequency (i.e., monthly, quarterly, semi-annually, or annually), deadline, and amount of each installment shall be indicated in the estate tax return, subject to the prior approval of the BIR; d. No civil penalties or interest may be imposed on estates permitted to pay the estate ax due by installment, However, the Commissioner is not prevented from executing enforcement actions against the estate afler the due date of the estate tax, provided that all the applicable laws and required procedures are followed/observed; and ¢. Incase of the lapse of 2 years without the entire estate tax due being paid, the remaining balance thereof shall be due and demandable subject to the applicable penalties and interest reckoned from the prescribed deadline for filing the return, and payment of the estate tax. (2) Partial Disposition of Estate and Application of its Proceeds to the Estate Tax Due? a. The estate tax return shall be filed within one (1) year from the date of decedent's death; b. The written request for the partial disposition” of the estate shall be approved by the BIR. The said request shall be filed, together with a notarized undertaking that the proceeds thereof shall be exclusively used for the payment of the total estate tax due; c. The computed estate tax due shall be allocated in proportion to the value of each property; d. The estate shall pay to the BIR the proportionate estate tax due of the property intended to be disposed of; fe. An electronic Certificate Authorizing Registration (“eCAR”) shall be issued upon presentation of proof of payment of the proportionate estate tax due of the property intended to be disposed. Accordingly, there may be as many eCARS issued as there are properties intended to be disposed to cover the total estate tax due, net of the proportionate estate taxes previously paid under this option; and £ Incase of failure to pay the total estate tax due out of the proceeds of the said disposition, the estate tax due shall be immediately due and demandable subject to the applicable penalties and interest reckoned from the prescribed deadline for filing the return and payment of the estate tax. This is without prejudice to the withholding of the issuance of the CARs on the remaining properties until the payment of the remaining balance of the estate tax due, including the penalties and interest. "The application for payment by installment or partial disposition of the estate must be filed with the Revenue District Office (“RDO”) where the estate is required to secure its TIN and file its tax returns. This request shall be approved by the Commissioner or his duly authorized representative. ' For purposes of this option, disposition shall refer to the conveyance of property, whether real, personal, or intangible property, with the equivalent cash consideration (Rev. Reg. No 12-2018). 16May 2020 Who pays the estate tax? 1) The executor or administrator. Where there are 2 or more executors or administrators, all of them shall be severally liable for the payment of the tax. 2) Ao heir shall be subsidiarily liable but only to the extent of his share in the net estate. Payment of Estate Tax as a Prerequisite to Distribution The estate tax clearance (CAR) issued by the Commissioner or the RDO having jurisdiction over the estate will serve es the authority to distribute the remaining or distributable properties or shares in the inheritance to the beirs or beneficiaries. No judge shall authorize the executor or a judicial administrator to deliver a distributive share to any party interested in the estate unless a certification from the Commissioner that the estate tax has deen paid is shown. Payment of Estate Tax as a Prerequisite to Transfer of Shares, Bonds, Rights There shall not be transferred to any new owner in the books of any corporation, sociedad anonima, partnership, business, or industry organized or established in the Philippines any share, obligation, bond, or right by way of gift inter vivos or mortis causa, legacy, or inheritance, unless an eCAR is issued by the Commissioner or his duly authorized representative. Payment of Tax as a Requirement for Withdrawal from Bank Account The executor, administrator, or any of the legal heirs may be allowed to withdraw from a bank deposit of the decedent within | year from the date of death The amount withdrawn shall be subject to a 6% final withholding tax. For joint accounts, the 6% final withholding tx shall be based on the share of the decedent in the joint bank deposit The bank is required to file the prescribed quarterly retum on the final tax withheld on or before the last day of the month following the close of the quarter during which the withholding was made." In all cases, the final tax withheld shall not be refunded. However, such final tax may be credited from the estate tax due in instances when the bank deposit subjected to such final withholding tax has been included in the gross estate in the estate tax return. In instances where the bank deposit accounts have been duly included in the gross estate of the decedent, and the estate tax due thereon paid, the executor, administrator, or any of the legal heirs shal! present the eCAR issued for the said estate prior to withdrawal. Such withdrawal shall no longer be subject to the withholding imposed under Section 97 of the Tax Code. ‘The bank shall issue the corresponding BIR Form No. 2306 (Certificate of Final Tax Withheld At Source) certifying such withholding. 7