DETERMINATION OF THE NET TAXABLE ESTATE 

Illustration 1: Single resident or citizen decedent

An unmarried Filipino decedent died leaving the following properties and possible deductions:

Philippines Abroad Total

Motorcycle P 120,000 - P 120,000
Business interests 6,500,000 P 800,000 7,300,000
Family home 10,200,000 - 10,200,000
Other personal properties 200,000 100000 300,000
Gross Estate P 17,020,000 P900,000 P17,920,000

Funeral expenses P 180,000 P 40,000 P 220,000

Judicial expenses 40,000 30,000 70,000
Obligations 300,000 200,000 50,000
Losses 50,000 50,000 100,000
Medical expenses 150,000 400,000 550,000

The net taxable estate and tax due shall be computed in the estate tax return as:

Separate Common Total

Gross Estate P 17,920,000 P 0 P 17,920,000
Less: Ordinary Deductions
Obligations P 500,000 - P 500,000
Losses 100,000 - 100,000
Net estate before share of
Surviving spouse P 17,320,000 P 0 P 17,320,000
Less: Share of the surviving spouse 0
Net estate before special deductions P 17,320,000

Net estate before special deductions P 17,320,000

Less: Special deductions
Family home 10,000,000
Standard deductions 5,000,000
Net taxable estate P 2,320,000
Multiply by: 6%
Estate tax due P 139,200
Note:
1. Since decedent is resident or citizen gross estate covers all properties within or without.
2. no more deduction for funeral judicial or medical expenses is allowed.
3. family home deduction = Lower of P10,000,000 and P10,200,000 actual family home.

Illustration 2: Single non-resident alien decedent

A non-resident Japanese died leaving the following properties and possible deductions:

Philippines Abroad Total

Condominium Unit P 2,000,000 - P 2,000,000
Business interests 1,500,000 P 800,000 2,300,000
Family home 1,200,000 1,200,000
Other personal properties 350,000 1,150,000 300,000
Gross Estate P 3,850,000 P3,150,000 P17,920,000

Funeral expenses P 50,000 P 240,000 P 290,000

Judicial expenses 40,000 110,000 150,000
Obligations 300,000 200,000 500,000
Losses 80,000 120,000 200,000
Transfer for public purpose 50,000 20,000 70,000
Vanishing deductions 140,000 80,000 220,000
Medical expenses 150,000 400,000 550,000

The net taxable estate and tax due shall be computed in the estate tax return as:

Separate Common Total

Gross Estate P 3,850,000 P 0 P 3,850,000
Less: Ordinary Deductions
Obligations P 275,000 - P 275,000
Losses 110,000 - 110,000
Transfer for public use 50,000 50,000
Vanishing deductions 140,000 - 140,000
Net estate before share of
Surviving spouse P 3,275,000 P 0 P 3,275,000
Less: Share of the surviving spouse 0
Net estate before special deductions P 3,275,000
Net estate before special deductions P 3,275,000
Less: Special deductions
Family home -
Standard deductions 500,000
Net taxable estate P 2,775,000
Multiply by: 6%
Estate tax due P 166,500

Note :
1. Gross estates of NRA decedents include Philippine properties only.
2. Matching rules apply to transfer for public use and vanishing deductions. Only those transferred
within the Philippines is deductible.
3. NRA decedents are allowed P500,000 standard deductions.

Illustration 3: Married resident or citizen decedent

Mr. Rice. a resident alien. died leaving the following properties and estate deductions:
Separate Properties Conjugal properties
Located in the Philippines: Mr. Rice Mrs. Rice
Personal properties P 8,400,000 P 1,100,000 P 2,500,000
Family home - - 10,800,000
Other real properties 2,300,000 1,800,000 4,000,000
Total Philippine properties P 10,700,000 P 2,900,000 P 17,300,000

Located abroad:
Personal properties P 2,000,000 P 1,000,000 P 4,000,000
Real properties 1,000,000 2,500,000 4,200,000
Total foreign properties P 3,000,000 P 3,500,000 P 8,200,000
World Properties P 13,700,000 P 6,400,000 P 25,500,000

The executor of Mr. Rice compiled the following expenses and deductions which
are matched to their respective sources:
Separate Properties Conjugal properties
Philippines and Abroad: Mr. Rice Mrs. Rice
Funeral expenses P 250,000 - P 350,000
Judicial expenses 600,000
Obligations 1,000,000 1,800,000 2,000,000
Losses 200,000 400,000 300,000
 The net taxable estate and tax due shall be computed as:

Separate Common Total

Philippine properties P 10,700,000 P 17,300,000 P 28,000,000

Foreign properties 3,000,000 8,200,000 11,200,000
Gross estate P 13,700,000 P 25,500,000 P 39,200,000
Less: ordinary deductions

Obligations 1,000,000 2,000,000 3,000,000

Losses 200,000 300,000 500,000
Net estate share before share of
surviving spouse P 12,500,000 P 23,200,000 P 35,700,000

Less: share of surviving spouse ÷2 P 11,600,000

Net estate before special deductions P 24,100,000

Less: Special deductions

Family home (see note2) 5,400,000

Standard deduction 5,000,000
Net taxable estate P 13,700,000
Multiply by: 6%
Estate tax due P 822,000

Note: 
1. The gross estate of citizens and residents includes both separate property of the decedent and
common properties wherever situated.
2.  The deductible family home is the lower of PS.4M (50% x P10.8M) and the P10M limit.

Illustration 4: Married non-resident alien decedent

 Mrs. Kay Yakoto, a non-resident Japanese, died leaving the following properties and estate deductions:

Separate Properties Conjugal

Located in the Philippines: Mr. Yakoto Mrs. Yakoto Properties

Tangible personal properties P 1,400.000 P 1,100,000 P 2,500,000

Intangible personal properties 300,000 600,000 200,000
Real properties 1,300,000 1,800,000 5,800,000
Total Philippine properties P 3,000,000 P 3,500,000 P 8,500,000
Located abroad:

Personal properties P 2,000.000 P 1,000,000 P 2,000,000

Real properties 1,000,000 2,500,000 2,500,000
Total foreign properties P 3,000,000 P 3,500,000 P 4,500,000
World Properties P 6,000,000 P 7,000,000 P13,000,000

A breakdown of the items of LIT is presented as follows:

Philippines Abroad
Separate Common Separate Common Total
Obligations 1M 1.4M 1M 1.6M 5M
Losses 200K 400K 200K - 800K
Transfer for public purpose 350K 250K 600K

The gross estate shall be computed as:

Mrs. Yakoto Common Total
Philippine gross estate P 3,500,000 P 8,500,000 P 12,000,000
Foreign gross estate 3,500,000 4,500,000 8,000,000
World gross estate P 7,000,000 P 13,000,000 P 20,000,000

Philippine Gross Estate Ratio = P12M/P20M = 60%

The total allowable deductions for LIT items shall be computed as follows:

Allowable
Global LIT Phil. Ratio Phil LIT
Obligations P 5,000,000 x 60% P 3,000,000
Losses 800,000 x 60% 480,000
Total P 6,500,000 P 3,900,000

Note: Transfer for public purpose is a separate item for deductions

The deductible amounts of LIT between separate and common properties shall be pro-rated based on
the ratio of actual LIT amount as follows:

Allowable percentage = Total Proportional Value Allowed

Total Actual Philippine Value

Hence,
Total Allowed / Actual Phil. Value = %
Obligations P 3,000,000 P 2,400,000 125%
Losses 480,000 600,000 80%

Thus,
 Separate Common Total
Obligations:
Actual P 1,000,000 P 1,400,000 P 2,400,000
x allowable % 125% 125% 125%
Deductible P 1,250,000 P 1,750,000 P 3,000,000

Losses:
Actual P 200,000 P 400,000 P 600,000
x allowable % 80% 80% 80%
Deductible P 160,000 P 320,000 P 480,000

The net taxable estate and tax due of Mrs. Yakoto shall be computed as: 

Separate Common Total

Gross estate P 3,500,000 P 8,500,000 P 12,000,000

Less: ordinary deductions

Pro-rated LIT:
Obligations 1,250,000 1,750,000 3,000,000
Losses 160,000 320,000 480,000
Transfer for public use 350,000 - 350,000
Net estate share before share of
surviving spouse P 1,740,000 P 6,430,000 P 8,170,000

Less: share of surviving spouse ÷2 3,125,000

Net estate before special deductions P 4,995,000

Less: Special deductions

Family home -
Standard deduction 500,000
Net taxable estate P 4,455,000
Multiply by: 6%
Estate tax due P 267,300

Note: Only properties located in the Philippines can be claimed as transfer for public purpose. (Matching
Rule)
DETERMINATION OF FOREIGN TAX CREDIT

Illustration 1:One foreign Country

A resident decedent paid P110,000 estate tax in Japan . the following shows a breakdown of his
net taxable estate:

 Net taxable estate in the Philippines P  1,200,000

 Net taxable estate in Japan        1,800,000
World net taxable estate P  3,000,000

The estate tax on the P3,000,000 world net taxable estate is P180,000

The estate tax credit shall be computed as:

  Actual foreign estate tax paid P    110,000

  Limit: (P1,800,000/P3,000,000 x P180,000) P    108,000

  Foreign tax credit - LOWER P    108,000

The estate tax payable shall be computed as:

  Estate tax due P    180,000

  Less: Foreign tax credit       108,000
  Estate tax still due or payable  P      72,000

Illustration 2: Multiple foreign countries

A citizen decedent had the following data:

Net taxable estate Estate tax paid

Hong Kong P  1,700,000 P 200,000 

Korea     2,800,000 150,000
Philippines     1,500,000
Total P  6,000,000

Limit 1: Per country limit

Hong Kong Korea Total

Actual estate tax paid P 200,000 P150,000
Limit:
-P1.7M/P6M x P360,000   102,000
-P2.8M/P6M x P360,000 ___________      168,000
LOWER P 102,000            P150, 000 P252,000
Limit 2: Total foreign countries

Lower in limit 1 P 252,000

Limit 2: (P1.7M+P2.8M)/P6M x P360,000 P 270,000
Final Foreign Tax Credit (LOWER) P 252,000

The estate tax payable shall be computed as:

Estate tax due P 360,000

Less: Foreign tax credit 252,000
Estate tax still due or payable P 108,000

DETERMINATION OF THE NET TAXABLE ESTATE PER COUNTRY

Illustration 1: Singe decedent – foreign tax credit

A single citizen decedent died leaving the following gross estate and deductions:

Philippines Japan Total

Gross Estate P21,000,000 P9,000,000 P30,000,000

Deductions

Obligations P300,000 P200,000 P500,000

Losses 50,000 50,000 100,000

Family Home 12,000,000

Estate Tax Paid - P320,000

The net taxable estate each country shall computed as:

Philippines Japan Total

Gross Estate P21,000,000 P9,000,000 P30,000,000

Less: Ordinary deductions

Obligations 300,000 200,000 500,000

Losses 50,000 50,000 100,000

Net estate before share of Surviving spouse P20,650,000 P8,750,000 P29,400,000

Less: Surviving Spouse - - -

Net Estate before special deduction P P20,650,000 P8,750,000 P29,400,000

Less: Special Deductions

Family Home (Note 1) P10,000,000 P10,000,000

Standard Home (Note 4) 3,500,000 1,500,000 5,000,000

Net taxable estate P7,150,000 7,250,000 P14,400,000

Multiple by: 6%

Estate tax due P 864,000

Note:

1. The deductible family home is the lower of P12M and P10M. Family home is deductible in its
country of location.
2. The P5,000,000 standard deduction is deductible from total gross estate. It must therefore be
allocated in each country based on gross estate.

The allocable standard deduction per country shall be:

- Philippines P21,000,000/P30,000,000 x P5M = P 3,500,000

- Japan P9,000,000/P30,000,000 x P5M = 1,500,000
Total P5,000,000

Estate Tax Credit and tax still due

The estate tax credit shall be computed as:

Actual foreign estate tax paid P320,000

Limit: (P7,150,000/P14,400,000 x P864,000) P429,000

Foreign tax credit - LOWER P320,000

The estate tax still due or payable shall be computed as:

Estate tax due P864,000

Less: Foreign tax credit P320,000
Estate tax still due or payable P544,000
Illustration 2: Married decedent – foreign tax credit

Mr. Nasser, a citizen decedent, died leaving the following properties and estate deductions:

Mr. Nasser Common Total

Properties in the Philippines P27,000,000 P45,000,000 P72,000,000
Properties in Egypt 3,000,000 5,000,000 8,000,000
World Total P30,000,000 P50,000,000 P80,000,000

The executor of Mr. Nasser compiled the following deductions.

Philippines Egypt Total

Obligations P*700,000 P**800,000 P1,500,000
Losses **200,000 *100,000 300,000
Family Home **15,000,000
Estate tax paid ? P 290,000

*Attributable to exclusive properties if Mr. Nasser

**Attributable to common properties
Chapter 15 - Estate Tax Payable 
The taxable net estate per country shall be computed as follows: 
 (Amounts are in thousands) 

PH EGYPT
Separate  Common Total Separate  common Total  GRAND
TOTAL
Gross estate P27,000 P45,000 72,000 3000 5000 8000 80000
Less:
Obligations 700  700 - 800 800 1500

Losses 200 200 100 - 100 300

Net estate before share 26300 44800 71100 2900 4200 7100 78200
of ss
Less: share of ss ÷2 22400 ÷2 2100 24500
Net estate before 48700 5000 53700
special deductions
Less:
Family home 7500 7500
Standard deduction 4500 500 5000
Net taxable estate (in 36700 4500 41200
thousands)

Note: 
1.  Family home = lower of (P15,000,000 x 50%) or 10M = P7,500,000
2.  Standard deduction is allocated based on gross estate as follows: 

Philippine Std. Deduction = P72M/P80M x 5M 4500000

Foreign Std. Deductions = P8M/P8OM x P5M 500000 
Total 5000000

Tax credit and estate tax still due 

The estate tax shall be computed as follows P41,200,000 x 6% = P2,472,000. 
The estate tax credit shall be computed as:
 Actual foreign estate tax paid 290000
Limit: (P4,500/P41,200 x P2,472,000) 270000
Foreign tax credit - LOWER 270000
The estate tax still due or payable shall be computed as:
Estate tax due 2472000
Less: Foreign tax credit 270000
Estate tax still due or payable 2202000
Determination of estate tax due with multiple foreign countries. 
In our example, we used only one country to simplify the Illustration. If multiple countries are involved,
similar procedures and logic are applied.

ESTATE TAX REQUIREMENTS 

1. Estate tax return 
2. Certified Public Accountant (CPA) Certification 
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 
CPA Certification 
Where the value of the gross estate exceeds P5,000,000, the return shall he 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 of 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 RD0 where the decedent is domiciled at the date of his death 
b. For non-resident decedents 
Whether, no resident citizen or alien with executor or administrator in the Philippines, the state
tax shall 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 from the RDO having jurisdictions of his legal residence.
Where to file the estate tax return?

1. Accredited agent bank

2. Revenue district office
3. Collection agent
4. Duly authorized treasurer of the city or municipality in which the decedent or administrator was
domiciled at the time of his death
5. Office of the commissioner, if the administrator or executor has no legal residence in the
Philippines

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
b.partial disposition of estate

Installment payment
The estate tax may be paid 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
b.8 quarterly payments
c.4 semi-annual payments
d.2 annual payments

In case of lapse of two years without the payment of the entire tax due, the remaining cash balance
thereof shall be due and demandable subject to the applicable penalties and interest reckoned from the
prescribed deadline for the filing the return and payment of tax.

Partial disposition

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. The said request
shall be filed, together with a notarized undertaking that the proceeds thereof shall be exclusively used
for the payment of estate tax due.
In case of a failure to pay the total estate tax due out form the proceeds of said disposition, the estate
tax due shall be immediately due and demandable subject to the applicable penalties and interest
reckoned from the prescribed deadline of filing of the return.

Liability for payment of the estate tax 

the estate tax shall be paid by the executor or administrator before delivery to any heir of his
distributive share of the estate. Where there are two or more executors or administrators, all of them
shall be severally liable for the payment of tax.
The executor or administrator of an estate has the primary obligation to pay the estate tax but the heir
or beneficiary has subsidiary liability for the payment of that portion of the estate which his distributive
share bears to the value of the total net estate. The extent of his liability, however. shall in no case
exceeds the value of his share in the inheritance. 
Discharge of executor or administrator from personal liability. 
The executor or administrator shall make a written application for the Commissioner of the amount of
the estate tax and discharge from personal liability. The executor or administrator. upon payment of the
amount of which he is notified, shall be discharged from personal liability for any deficiency in the tax
thereafter found to be due and shall be entitled to a receipt in writing showing such discharge. 
No judge shall authorize the executor or judicial administrator to deliver a distributive share to any party
interested in the estate unless a certification from the Commissioner that the estate has been paid is
shown. 
If, after the payment of the estate tax. new obligations of the decedent shall appear, and the persons
interested shall have satisfied them by order of the Court, they shall have a right to the restitution of the
proportional part of the tax paid.