You Need To Know About

Estate Tax
 
Estate tax or also referred to as inheritance tax is defined by the Bureau of Internal Revenue as
“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."

The executor, administrator, beneficiaries or heirs are the ones paying for the estate taxes.
Transferring property to heirs or beneficiaries will not be executed unless the estate tax is paid.  

1. Who are required to file the Estate Tax return? 

a) The executor or administrator or any of the legal heirs of the decedent or non-resident of the Philippines
under any of the following situation:

- In all cases of transfer subject to Estate Tax;

- Where though exempt from Estate Tax, the gross value of the estate exceeds two hundred thousand P
200,000.00; and

- Where regardless of the gross value, the estate consists of registered or registrable property such as real
property, motor vehicle, share of stocks or other similar property for which a clearance from the Bureau of
Internal Revenue (BIR) is required as a prerequisite for the transfer of ownership thereof in the name of the
transferee. (part II par.(1.#3) of RMC No. 34-2013)

b) Where 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 must file the return.

c) The Estate Tax imposed under the Tax Code shall be paid by the executor or administrator before the
delivery of the distributive share in the inheritance to any heir or beneficiary. Where there are two or more
executors or administrators, all of them are severally liable for the payment of the tax. The estate tax
clearance issued by the Commissioner or the Revenue District Officer (RDO) having jurisdiction over the
estate, will serve as the authority to distribute the remaining/distributable properties/share in the
inheritance to the heir or beneficiary.

d) 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 exceed
the value of his share in the inheritance.