CHAPTER 5: ESTATE TAX CREDIT AND DISTRIBUTABLE ESTATE

ESTATE TAX CREDIT

*Allowable deductions – are deduction from gross estate.

*Tax credit – deduction from Philippine estate tax itself.

 There is only this foreign estate tax that may claimed against PH estate tax.

*Estate Tax credit – the taxpayer’s right to deduct from tax due the amount of tax it has paid to a foreign country.

 The amount of credit for estate tax paid to a foreign country shall not exceed the proportion of the tax due in
the PH which the decedent’s net estate situated within such country bears to his entire net estate.
 Deduction allowed by law to lessen the harshness of international double taxation.
 NOTE: NRA decedents are not entitled to estate tax estate.

PHILIPPINE ESTATE TAX DUE

- In determining the allowable estate tax credit, the estate tax due in the PH shall be computed first based before the
estate tax credit may be deducted, as follows:

Estate Tax Due Pxx

Less: Tax Credit for foreign estate tax paid (xx)

(lower between estate tax paid abroad and the limit)

Philippines Estate Tax Payable Pxx

NET DISTRIBUTABLE ESTATE

 Net Taxable estate is the result of the application of the law under estate taxation.
 Net distributable estate is the amount arrived at from gross estate consisting all properties in the possession
and control of the decedent at the time of death and actual expenses, charges, and payments from the gross
estate.