UM BANSALAN COLLEGE

LET'S LEARN!
TRANSFER AND BUSINESS TAXATION
CONCEPTS AND
NATURE OF
TRANSFER TAXES
A transfer tax is charged by a state or local
government to complete a sale of property from
one owner to another.

A transfer tax is an obligation imposed on the

gratuitous disposition of private property or
rights.

A person may be a naturap person or a

juridical person created by law.
UM BANSALAN COLLEGE
KINDS OF TRANSFER TAXES
BILATERAL TRANSFER
Involve transmission of property
01 for a consideration. They
referred to as onerous
transactions or exchnages.
UNILATERAL TRANSFER
Involve transmission of
02 property by a person without
consideration. They are
commonly referred to as
gratuitous transactions or
simply, transfers.
COMPLEX TRANSFER
Are transfers for less than full
03 and adequate consideration.
These are sales made at
prices which are significantly
lower than the fair value of
the property sold.
 Types of Unilateral Transfers
Donation

The gratuitous transfer of property

from a living donor to a donee.
Since it is made between living
persons, it is called donation inter
vivos.

Succession

The gratuitous transfer of property

from a deceased person upon
death to his heirs. Succession is a
form of donation effected by
death; hence it is called Donation
mortis causa.
TAX RULES ON TRANSFERS FOR ADEQUATE CONSIDERATION

Dammed pure exchanges and their subject

to income tax, not to transfer tax.

TRANSFER FOR LESS THAN ADEQUATE AND FULL CONSIDERATION

Transfer for less than full and adequate consideration are
split into its components: transfer element and exchange
element.

ILLUSTRATION
A property with a fair value of
P40,000 and tax basis of P25,000
was sold for P30,000
UM BANSALAN COLLEGE

TYPES OF TRANSFER TAX

Donor's tax Estate tax

imposed on imposed on
donation inter vivos donation mortis-
causa
 Estate taxes returned during the build-up to the Civil War.
The Revenue Act of 1862 included an inheritance tax, which
HISTORY OF applied to transfers of personal assets. In 1864, Congress
amended the Revenue Act, added a tax on transfers of real
DEATH TAXES estate, and increased the rates for inheritance taxes. Act
2601 which took effect on July 1, 1916 was the first
inheritance tax law of the Philippines, imposing graduated
rates computed on net inventoried property left by the
decedent. It was subsequently embodied in the Revised
Administrative Code.
ESTATE TAX VS INHERITANCE TAX

The main difference between inheritance and estate taxes is

the person who pays the tax. Unlike an inheritance tax, estate
taxes are charged against the estate regardless of who
inherits the deceased's assets. The executor is responsible for
filing a single estate tax return and pays the tax out of the
estate's funds. An estate tax is calculated on the total value of
a deceased's assets, and is to be paid before any distribution
is made to the beneficiaries.

If you've inherited money or property after a loved one dies, some states
impose an inheritance tax. This is a state tax in which the beneficiary (the
person or persons who receive money or property from the estate of a
deceased person), must pay. Unlike the federal estate tax (where the
estate pays the taxes), inheritance taxes are the responsibility of the
beneficiary of the property. This tax is calculated separately for each
beneficiary, and as such, each beneficiary is responsible for paying his or
her own inheritance taxes. States may also impose an inheritance tax.
 UM BANSALAN COLLEGE

NATURE AND OF ESTATE

TAX
EXCISE TAX- estate tax is not a tax on the
property but on the privilege to transfer property
through death
REVENUE OR GENERAL TAX- estate tax is intended
as a revenue or fiscal measure.
AD VALOREN TAX- estate tax is dependent upon
the value of the estate
NATIONAL TAX- estate tax is imposed by the
national government
PROGRESSIVE TAX- estate tax is determined
based on a tax table of progressive rates.
RIMBERIO CO

PURPOSE AND JUSTIFICATION OF

ESTATE TAX
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.
WHY ESTATE The estate tax is very important because the
properties or estate of the deceased cannot
TAX be transferred to the heirs without the
payment of estate tax.
IMPORTANT?
UM BANSALAN COLLEGE

2023 2018
16.7% 16.7% INCIDENCE OR
BURDEN OF ESTATE
TAX
2022 2019
Tax incidence is the manner in which the tax
16.7% 16.7%
burden is divided between buyers and sellers. The
tax incidence depends on the relative price elasticity
of supply and demand. When supply is more elastic
than demand, buyers bear most of the tax burden.

2021 2020
16.7% 16.7%
WHO PAYS THE
ESTATE TAX?

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.
WHO HAS THE POWER TO
IMPOSE ESTATE TAX?
Republic Act 8424 or the National Internal
Revenue Code of 1997 governs the imposition
of estate tax.
OBLIGATION TO PAY
TAX
Tax Obligations means the responsibility
for payment of taxes, withholding,
certification and reporting requirements,
claims for exemptions or refund, interest,
penalties and other related expenses of
the Fund. Taxes are required contributions
that businesses and individuals with
income must pay to the Bureau of Internal
Revenue (BIR). The BIR serves as the
Philippine Tax Authority, which collects
applicable taxes at least once a year.
ACCRUAL OF THE TAX
Under the accrual method, you generally
report income in the tax year you earn it,
regardless of when payment is received. You
deduct expenses in the tax year you incur
them, regardless of when payment is made.

LETS GET STARTED

BASIC CONCEPTS OF
SUCCESSION
Is a mode of acquisition by virtue of which the
property, rights, and obligations to the extent of
the value of the inheritance, of a person are
transmitted through his death to another or
others by will or by operation of law (Art 774,
Civil Code)
01
TESTAMENTARY SUCESSION
the designation of an heir, made in will TYPES OF SUCCESSION
executed in the form prescribed by law
(Art. 779, Civil Code)

02
INTESTATE SUCCESSION
The distribution of the estate shall be on
accordance with the default provision of the
civil Code on Succession.

03
MIXED SUCCESSION
transmission of the decedent properties shall
be partly by virtue of a written will and partly
by operation of law.
THANKS FOR
LISTENING
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