With the estate tax amnesty, long unsettled estates can now be transferred. Without the burden of tax liabilities, the heirs can focus on making idle properties productive thereby bringing economic benefit to their families.
President Rodrigo Duterte
on the Tax Amnesty Act (Republic Act No. 11213)
The estate tax liabilities of those who died on or before December 31, 2017 can now rest in peace with the passage of the Tax Amnesty Act of 2019 (Republic Act No. 11213) on 14 February 2019. Now, the estates of your dearly departed will be taxed at a flat rate of 6%. Penalties for non-filing or late filing are waived. You only have a limited period of two (2) years or until June 14, 2021 to avail of the amnesty.
The law became effective with the issuance of the BIR of Revenue Regulation No. 6-2019 (BIR RR No. 6-2019) on the guidelines for processing estate tax amnesty applications
What is an estate?
Simply put, estate pertains to all the properties owned by a person at the time of his death. Upon the death of the person (also known as the “decedent”), his properties are automatically transmitted to his lawful heirs and beneficiaries.
What is an estate tax and why is it being imposed?
The estate tax is the tax paid to the government because the decedent transferred his estate to his lawful heirs and beneficiaries. It is essentially a tax on the privilege of the decedent to transmit his estate.
When should estate tax be paid?
Prior to the passage of the Tax Reform for Acceleration and Inclusion Law (TRAIN Law) on January 1, 2018, the estate tax must be paid within six (6) months from the death of the decedent. The failure to pay estate taxes within the six-month period has corresponding penalties and charges.
Under the TRAIN Law, the estate tax must be paid within one (1) year from the death of the decedent.
How much was the estate tax rate prior to the TRAIN Law and the estate tax amnesty?
Prior to the passage of the TRAIN Law, the estate tax rate had a graduated rate of five percent (5%) to twenty percent (20%) of the net estate of the decedent. Due to the relatively high estate tax rate coupled with the limited period (6 months from death) to file the estate tax return and pay the estate tax, many legal heirs and beneficiaries failed to pay the estate taxes of their deceased family members leading to the accumulation of penalties and charges.
What is the practical consequence of unpaid estate taxes?
Consequently, the properties comprising the estates of the decedents cannot be easily sold or in any way disposed of. These properties cannot be transferred to and/registered under the names of new buyers unless the estate taxes are settled.
BASIC GUIDELINES FOR THE AVAILMENT OF ESTATE TAX AMNESTY UNDER BIR RR NO. 6-2019
Who can avail of the estate tax amnesty?
The estate tax amnesty shall cover the estates of decedents who died on or before December 31, 2017.
The estates of the decedents who died after December 31, 2017 are not covered by the estate tax amnesty because these are already covered by the TRAIN Law. The estate tax amnesty and the TRAIN Law impose the same estate tax rate of six percent (6%) of the net estate.
What is the estate tax amnesty rate?
The estate tax amnesty rate is six percent (6%) of the net taxable estate of the decedent at the time of death.
What is the net taxable estate?
The net taxable estate refers to the gross estate of the decedent less allowable deductions as provided under the National Revenue Code of 1997, as amended, or the applicable estate tax law at the time of the death of the decedent.
See the list of allowable deductions here.
What happens to the penalties imposable on estates that were not paid on time?
The penalty charges are waived under the terms of the estate tax amnesty. The BIR states that the estate tax amnesty rate of six percent (6%) shall be imposed on each decedent’s total net taxable estate at the time of death without penalties at every stage of transfer of property (in case of multiple decedents).
Is there a minimum estate tax amnesty? If yes, how much is the minimum estate tax amnesty?
Yes, there is a minimum estate tax for the transfer of the estate of each decedent. The BIR pegged the minimum estate tax amnesty at Five Thousand Pesos (P5,000.00). This means that even if the value of the allowable deductions exceeded the value of the gross estate, the minimum amount of P5,000 as minimum estate tax amnesty rate must still be paid.
When is the deadline for availing the estate tax amnesty?
Taxpayers have until June 14, 2021 to process and pay the estate tax under the estate tax amnesty.
What BIR forms should be prepared to avail of the estate tax amnesty?
The Estate Tax Amnesty Return (ETAR) (BIR Form No. 2118-EA) and the Acceptance Payment Form Estate Tax Amnesty (BIR Form No. 0621-EA).
What are the mandatory documents to be prepared to avail of the estate tax amnesty?
While the documentary requirements may vary depending on the properties comprising the estate, the following are the mandatory documents for submission to the BIR:
Certified True Copy of the Death Certificate of the Decedent;
BIR Tax Identification Number of the Decedent and of the heirs;
Certification of the Barangay Captain of the last residence of the decedent;
At least one valid government ID of the executor/ administrator of the estate, or if there is not executor or administrator, of the authorized representative processing the estate tax amnesty application
Where should the application for estate tax amnesty be filed?
The ETAR, along with the other documentary evidence should be filed at the Revenue District Office having jurisdiction over the last residence of the decedent.
If the properties involved are common properties of multiple decedents emanating from the first decedent, and no estate tax returns have been previously filed, the amnesty tax returns for every stage of transfer/succession may be filed together in any one (1) RDO having jurisdiction over the last residence of any of the decedents.
Should you have any questions on the availment of the estate tax amnesty, kindly contact us here.