Rate of estate tax – 6% based on the value the taxable net estate.

Tax credit for estate tax paid to a foreign country

1. Who can claim? Only citizen or resident alien decedent.
2. Limitations on tax credit:
1st Limitation
Net estate (per foreign country) / Total net estate x Philippine estate tax

2nd Limitation
Net estate (all foreign country) / Total net estate x Philippine estate tax

Filing and Payment

1. Filing of estate tax return: 1 year after death
2. Payment of tax: Upon filing of return
3. Place of filing – Authorized agent bank, RDO, Collection agent, or duly authorized treasurer of the City
or Municipality in which the decedent was domiciled at the time of his death or there be no legal
residence in the Philippines, with the office of the commissioner.
4. When is filing of return required? (under oath, in duplicate)
a. In all cases of transfer subject to the estate tax.
b. Regardless of the gross value of the estate, where said estate consists of registered or registrable
property such as real property, motor vehicle, shares of stocks or other similar property for which a
clearance from the BIR is required as a condition precedent for the transfer of ownership in the name of
the transferee.

5. When must the return be accompanied by statement certified by CPA?

When the gross value of the estate is more than P5,000,000.

6. State the information included in the certified statement.

a. Itemized assets of the decedent with valuation.
b. Itemized deductions.
c. Tax due and payable.

Surcharge (Ad valorem penalty)

50% - False or fraudulent return is willfully filed.
- Willful neglect to file a return on time.
25% - failure to file any return and pay the tax due thereon.
- if the return is not filed with the proper internal revenue officer.
- Failure to pay on time the deficiency tax shown in the notice of assessment.
Note: The failure to file any return and pay the tax thereon are now treated as one act or violation for
purposes of the imposition of penalties.

Interest for failure to pay tax per return on time

Rate – 20% per annum, or such higher rate as may be prescribed by rules and regulations, computed
from the date prescribed for payment until the amount is fully paid.
Sample problems:
Problem 1
A non-resident, not citizen of the Philippines, single, died leaving a gross estate in the PH of P1,000,000
and a gross estate outside the Philippines of P3,000,000. His expenses and obligations were:
Funeral expenses outside the Philippines, P100,000
Mortgage of property outside the Philippines, P200,000
Mortgage of property in the Philippines, P50,000
Transfer to Philippine government of property outside the Philippines, P100,000
a. How much is allowable LIT deduction in Philippine gross estate?
b. How much is the allowable deduction in the Philippine gross estate?
c. How much is the net estate in the Philippines?

Problem 2
A citizen and resident of the Philippines, married, died, leaving the following properties:
Real and personal properties acquired during the marriage
(including family home with FMV of P6,000,000) 8,000,000
Land and building inherited from the father 11/2 years ago
(with FMV at that time of P1,500,000) 2,000,000
Exclusive properties 2,500,000
Cash, exclusive property (including P500,000 received
by inheritance from the father) 1,500,000
Claims against conjugal properties 600,000
Unpaid mortgage of the land and building inherited (from an
original of P600,000 when inherited) 100,000
a. How much is allowable vanishing deduction?
b. How much is the total ordinary deduction?
c. How much allowable family home deduction?
d. How much is net estate?
e. How much is the estate tax payable?

Problem 3
USA: net estate of P100,000 and estate tax paid of P4,500
Japan: net estate of P200,000 and estate tax paid of P15,000
Philippines: net estate of P200,000
The decedent was a citizen and resident of the Philippines.
a. The allowable estate tax credit for foreign estate taxes paid is:
b. The estate tax still due after the tax credit for foreign estate taxes paid is:

Problem 4
Gross estate PH, P6,000,000
Gross estate USA, P4,000,000
Claims against the estate PH, 1,000,000
Claims against the estate USA, P1,000,000
How much was the Philippine estate tax due if the decedent was a resident, not citizen of the
Philippines, and there was a foreign estate tax payment of P200,000?
Problem 5
Taxpayer died February 2, 2018. No judicial proceedings were instituted for the settlement of his estate.
Return was filed and tax of P60,000 was paid May 2, 2019. The estate tax due, including increments, as
of May 2, 2019 is: