TRANSFER &

BUSINESS TAXATION
(Estate Tax)
Atty. Arnold V. De Castro
 BASIC PRINCIPLES,
CONCEPT AND DEFINITION
• Estate tax- tax on right of transmitting property at the
time of death and on the privilege that a person is
given in controlling to a certain extent the disposition
of his property to take effect upon death

• Nature, Purpose, and Object: it’s a transfer tax not a

property tax.

• Purpose: To tax the shift of economic benefits and

enjoyment of property from the dead to the living
 TIME AND TRANSFER OF
PROPERTIES
• rights to the succession are transmitted from the moment of
death of the decedent.

TAXABLE TRANSFERS
MORTIS CAUSA INTER VIVOS
take effect after death, either take effect during the lifetime
testate or intestate of the donor

subject to estate tax subject to donor’s tax

 CLASSIFICATIONS OF
DECEDENT
• Estate Tax applies only to individuals.
Citizens and residents Non-resident alien (NRA).
INTER VIVOS
Resident Citizen
take effect during the
Non-Resident Citizen
lifetime of the donor
Resident Alien

• For purposes of estate taxation, RESIDENCE = Domicile/the

permanent home or the place to which whenever absent, one
intends to return (animus revertendi), and depends on facts
and circumstances, in the sense that they disclose intent. It is,
therefore, not necessarily the actual place of residence.
 COMPOSITION OF GROSS
ESTATE
• Inclusion in GROSS ESTATE:
• 1. Decedent’s interest - property owned by the decedent actually and
physically present in his estate at the time of his death;
• 2. Properties not physically in the estate like proceeds of life insurance
– Note: Accident insurance is excluded, thus, not taxable

DEDUCTIONS
Ordinary Special
a. Losses, indebtedness, taxes a. Family home (max of P10 Million)
b. Claims against the estate
c. Unpaid mortgages b. Standard deduction (fixed at
P5Million)
 COMPOSITION OF GROSS
ESTATE
Requisites for the Value of Family Home to be part of the Deduction:
•1.decedent was married (or if single, was the head of the family)
•2. Along with the decedent, any of the beneficiaries must be dwelling in the
family home.
• 3. The family home as well as the land on which it stands must be owned
by the decedent.
•4. The family home must be the actual residential home of the decedent
and his family at the time of his death, as certified by the Barangay Captain
of the locality where the same is situated.

– Take Note:

GROSS ESTATE less ALLOWABLE DEDUCTIONS= NET ESTATE

 COMPOSITION OF GROSS
ESTATE
• The TRAIN Law introduces the following changes:
1. Rate of Estate Tax – Fixes the rate of estate tax to 6% of the value of the
net estate. Likewise removes the estate tax in cases wherein the net estate
value is P200,000 or less.
2. Funeral, judicial and medical expenses are included in gross estate.
3. The requirement to file Notice of Death by the executor, administrator or
legal heir is REMOVED.
4. Requirement for a Statement Certified by a Certified Public Accountant
(“CPA”). – Increases the threshold amount for requiring said statement
from P2,000,000 to P5,000,000 based on the gross value of the estate.
5. Time for Filing of Estate Tax Return – Extends the deadline for the filing
of the return from 6 months to 1 year from the decedent’s death.
 REFERENCES

A.Books
Ingles (2018). Tax Made Less Taxing: A Reviewer with Codals and Cases. Rex Printing Company, Inc.
De Leon and De Leon. (2018). The Fundamentals Of Taxation. Rex Publisher
B. Electronic References
Jurisprudence (n.d.) Retrieved on 13 August 2021 from http://sc.judiciary.gov.ph/decisions/
Jurisprudence and NIRC (n.d.) Retrieved on 13 August 2021 from http://supreme.chanrobles.com/
Jurisprudence, NIRC and TRAIN Law(n.d.) Retrieved on 13 August 2021 from
https://lawphil.net/judjuris/judjuris.html
Jurisprudence (n.d.) Retrieved on 13 August 2021 from
https://www.officialgazette.gov.ph/section/judicial/supreme-court/decisions/
C. Others
Official Gazette of the Republic of the Philippines
Philippine Reports
Supreme Court Reports Annotated
UP Law Bar Operations Commission. (2020). University of the Philippines 2020 Taxation Law Reviewer