ESTATE TAX COMPARISON

PRE-TRAIN TRAIN
Estate Tax Rates The Tax Of the Excess Estate tax rate is fixed at 6%.
Over But not Over Plus
Shall be Over
P 200,00.00 Exempt
P200,000.00 500,000.00 0 5% P 200,000.00
500,000.00 2,000,000.00 P 15,000.00 8% 500,000.00
2,000,000.00 5,000,000.00 135,000.00 11% 2,000,000.00
5,000,000.00 10,000,000.00 465,000.00 15% 5,000,000.00
10,000,000.00 1,215,000.00 20% 10,000,000.00

Allowable deductions CITIZENS OR RESIDENT ALIEN DECEDENTS WERE ALLOWED THE CITIZENS OR RESIDENT ALIEN DECEDENTS ARE
FOLLOWING DEDUCTIONS: ALLOWED THE FOLLOWING DEDUCTIONS:

I. ORDINARY DEDUCTIONS I. ORDINARY DEDUCTIONS

(A) ELIT Expenses (Expenses, Losses, Indebtedness, Taxes) (A) CLUT Expenses
(1) Funeral expenses – lowest of (a) actual expenses, (b) 5% of gross estate, or (c)
P200,000
(2) Judicial expenses – court/litigation expenses
(3) Claims against the estate – unpaid obligations of the decedent of a pecuniary Claims against the estate
nature
(4) Claims against insolvent persons Claims against insolvent persons
(5) Unpaid mortgages Unpaid mortgages
(6) Income and property taxes Income and property taxes
(7) Losses Losses

(B) Transfers for Public Use (B) Transfers for Public Use

(C) Vanishing Deduction (on Property Previously Taxed) (C) Vanishing Deductions (on Property Previously Taxed)

II. SPECIAL DEDUCTIONS II. SPECIAL DEDUCTIONS

(A) Family Home – lower of FMV of family home or P1,000,000 (A) Family Home – lower of FMV or P10,000,000

(B) Medical Expenses – incurred within one (1) year of death; maximum of P500,000

(C) Standard Deduction – P1,000,000 (B) Standard Deduction – P5,000,000

(D) Amounts received by the heirs under R.A. 4917 – amounts/benefits received by (C) Amounts received by the heirs under R.A. 4917
the heirs from the decedent’s employer as a consequence of his death.

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 III. SHARE OF THE SURVIVING SPOUSE IN THE NET CONJUGAL III. SHARE OF THE SURVIVING SPOUSE IN THE NET
PROPERTIES CONJUGAL PROPERTIES

NON-RESIDENT ALIEN DECEDENTS WERE ALLOWED THE FOLLOWING NON-RESIDENT ALIEN DECEDENTS ARE ALLOWED
DEDUCTIONS: THE FOLLOWING DEDUCTIONS:

I. ORDINARY DEDUCTIONS I. ORDINARY DEDUCTIONS

(A) ELIT Expenses (Expenses, Losses, Indebtedness, Taxes) (A) CLUT Expenses
(1) Funeral expenses – lowest of (a) actual expenses, (b) 5% of gross estate, or (c)
P200,000
(2) Judicial expenses – court/litigation expenses
(3) Claims against the estate – unpaid obligations of the decedent of a pecuniary Claims against the estate
nature
(4) Claims against insolvent persons Claims against insolvent persons
(5) Unpaid mortgages Unpaid mortgages
(6) Income and property taxes Income and property taxes
(7) Losses Losses

Prorated: ELIT x Philippine Gross Estate Prorated: CLUT x Philippine Gross Estate
Worldwide Gross Estate Worldwide Gross Estate

(B) Transfers for Public Use (B) Transfers for Public Use

(C) Vanishing Deduction (on Property Previously Taxed) (C) Vanishing Deduction (on Property Previously Taxed)

II. SPECIAL DEDUCTIONS – No special deductions were available for non- II. SPECIAL DEDUCTIONS
resident alien decedents
Standard Deduction – P500,000

III. SHARE OF THE SURVIVING SPOUSE IN THE NET CONJUGAL III. SHARE OF THE SURVIVING SPOUSE IN THE NET
PROPERTIES CONJUGAL PROPERTIES

Filing a notice of Sec. 89. Written notice of death required for gross estates exceeding P20,000. Repealed.
death
Filing of Estate tax Under Sec. 90 (A) of the Tax Code, an estate tax return shall be filed in: An estate tax shall be filed in:
returns (1) All transfers subject to estate tax, or (1) All transfers subject to estate tax, or
(2) Where, though exempt from tax, the gross value of the estate exceeds P200,000,
or
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 (3) Regardless of the gross value, the estate consists of registered or registrable (2) Regardless of the gross value, the estate consists of
property. registered or registrable property.

Time for Filing Under Sec. 90 (B), the estate tax return shall be filed within 6 months from the death of The estate tax return must be filed within 1 year from the death
the decedent. of the decedent.

Payment of estate Sec. 91 Payment of estate tax Additional provision:

taxes An estate with insufficient cash is allowed to pay the estate tax
due by installment within two (2) years from the statutory date
for its payment without civil penalty and interest.

Payment of tax Sec. 97. A bank shall not allow withdrawal from a decedent’s bank account without Banks, which have knowledge of the death of the person, shall
antecedent to the the Commissioner certifying that taxes imposed thereon have already been paid. allow withdrawals from a decedent’s deposit account subject to
transfer of shares, a 6% withholding tax.
bonds, or rights The administrator of the estate or anyone of the heirs may, when authorized by the
Commissioner, withdraw an amount not exceeding P20,000 even without the
certification from the Commissioner that the estate taxes have been paid.

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 DONOR’S TAX COMPARISON

PRE-TRAIN TRAIN
Transfer for Section 100. The amount by which the FMV of the property sold exceeds the However, if the sale or barter is a bona fide arm’s length
Insufficient consideration received shall be deemed a gift. transaction, the same shall be considered as a made for an
Consideration adequate and full consideration. Therefore, any excess of the
FMV over the selling price is NOT deemed a gift.

Dowry Exemption Section 101(A)(1). Dowries or gifts made on account of marriage and before its Repealed.
celebration or within 1 year thereafter by parents to their children to the extent of the
first P10,000.

Note: Non-resident alien donors are not allowed any dowry deduction.

Donor’s tax rate Sec. 99 (A) and (B) Donor’s tax rates are as follows: Donor’s tax rate fixed at 6% based on total gifts in excess of
P250,000 exempt gift made during the calendar year whether
a. Not stranger – based on total net gift the donee is a stranger or not.
The Tax
Net Gift Over But not Over Plus Of the Excess Over
Shall be
100,000.00 exempt
100,000.00 200,000.00 0 2% 100,000.00
200,000.00 500,000.00 P 2,000.00 4% 200,000.00
500,000.00 1,000,000.00 14,000.00 6% 500,000.00
1,000,000.00 3,000,000.00 44,000.00 8% 1,000,000.00
3,000,000.00 5,000,000.00 204,000.00 10% 3,000,000.00
5,000,000.00 10,000,000.00 404,000.00 12% 5,000,000.00
10,000,000.00 and over 1,004,000.00 15% 10,000,000.00

Not a stranger means a person who is a:

(1) Brother or sister (whole or half-blood), spouse, ancestor, or lineal descendant;
or
(2) Relative by consanguinity in the collateral line within the 4th degree

b. Stranger – 30% based on the net gifts

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