Briefing on RA 10963: Tax Reform

for Acceleration and Inclusion

(TRAIN) – Transfer Taxes
Estate Tax
NIRC NIRC TRAIN
Provision
Section 84 The Estate Tax rate is based on graduated schedule. The Estate Tax rate is fixed at
Rates of Estate NET ESTATE TAX 6% based on the value of the
Tax net estate.
Not over ₱200,000 Exempt
Over ₱200,000 but not 5% of the excess over
over ₱500,000 ₱200,000
Over ₱500,000 but not ₱15,000 + 8% of the
over ₱2M excess over ₱500,000
Over ₱2M but not over ₱135,000 + 11% of the
₱5M excess over ₱2M
Over ₱5M but not over ₱465,000 + 15% of the
P10M excess over ₱5M
Over ₱10M ₱1,215,000 + 20% of the
excess over ₱10M

TRAIN Briefing – Transfer Taxes

VER 1.0 – January 2018
Estate Tax
NIRC Provision NIRC
Section 86 (A) The value of the net estate of a
Allowable resident or citizen is determined
deductions from by deducting the following from
the gross estate of the gross estate:
a citizen/resident 1. Standard deduction of
₱1,000,000;
2. Expenses, losses,
indebtedness, and taxes
a. Funeral expenses
b. Judicial expenses
c. Claims against insolvent
persons
d. Unpaid mortgages
TRAIN Briefing – Transfer Taxes
VER 1.0 – January 2018
TRAIN
The following are the allowable
deductions from the gross estate of
a resident or citizen:
1. Standard deduction of
₱5,000,000;
2. Claims against the estate;
3. Claims against insolvent
persons;
4. Unpaid mortgage or
indebtedness on property;
Estate Tax
NIRC Provision NIRC TRAIN
Section 86 (A) 3. Property previously taxed; 5. Property previously taxed;
Allowable 4. Transfers for public use; 6. Transfers for public use;
deductions from 5. Family home in the amount of 7. Family home, in the increased
the gross estate of ₱100,000,000; amount of ₱10,000,000;
a citizen/resident 6. Medical expenses, not 8. Amounts received by heirs RA
exceeding ₱500,000; No.
7. Amount received by heirs 4917 (Retirement benefits of
under RA No. 4917 private firm employees)
(Retirement benefits of private
firm employees)

TRAIN Briefing – Transfer Taxes

VER 1.0 – January 2018
Estate Tax
NIRC Provision NIRC TRAIN
Section 86 (B) The value of the net estate of a For Non-residents:
Allowable non-resident is determined by 1. Standard deduction in the
deductions from deducting the following from the amount of ₱500,000;
the gross estate of gross estate: 2. Value of
a non-resident 1. Expenses, losses,  Claims against the estate
alien indebtedness, and taxes in  Claims against the insolvent
proportion to the value of person
entire gross estate situated in  Unpaid mortgages
the Philippines; In proportion to the value of the
2. Property previously taxed; entire gross estate situated in
3. Transfers for public use the Philippines
3. Property previously taxed;
4. Transfers for public use

TRAIN Briefing – Transfer Taxes

VER 1.0 – January 2018
Estate Tax
NIRC Provision NIRC TRAIN
Section 86 (D) No deduction shall be allowed in Miscellaneous provision is deleted.
Miscellaneous the case of a non-resident not a
provision for non- citizen of the Philippines, unless
residents the executor, administrator, or
anyone of the heirs, as the case
may be, includes in the return
required to be filed under the
Section 90 the value at the time of
his death of that part of the gross
estate of the non-resident not
situated in the Philippines.

TRAIN Briefing – Transfer Taxes

VER 1.0 – January 2018
Estate Tax
NIRC Provision NIRC TRAIN
Section 89 Notice of decedent’s death shall Requirement for filing of notice of
Notice of Death be filed by the executor, death is removed.
administrator, or any of the legal
heirs within two months after
death or after qualifying as such
executor or administrator:
 In all cases of transfers subject
to tax
 In cases where though exempt
from tax, the gross value of the
estate exceeds ₱20,000.

TRAIN Briefing – Transfer Taxes

VER 1.0 – January 2018
Estate Tax
NIRC Provision NIRC TRAIN
Section 90 Estate tax returns showing a The threshold amount for the
Attachment to gross value exceeding requirement of attaching a statement
Estate Tax Return ₱2,000,000 shall be supported duly certified by a CPA is increased
– CPA certification with a statement duly certified by to ₱5,000,000 (from ₱2,000,000).
a CPA

Section 90 Estate tax returns shall be filed The filing of estate tax returns shall
Time of filing of within six (6) months from the be within one (1) year from the
estate tax return decedent’s death. decedent’s death.

TRAIN Briefing – Transfer Taxes

VER 1.0 – January 2018
Estate Tax
NIRC Provision NIRC TRAIN
Section 91 (C) No provision In case the available cash of the
Payment by estate is insufficient to pay the total
installment of estate tax due, payment by
estate tax [new] installment shall be allowed within
two (2) years from the statutory
date of payments, without civil
penalty and interest.

TRAIN Briefing – Transfer Taxes

VER 1.0 – January 2018
Estate Tax
NIRC Provision NIRC
Section 97 If a bank has knowledge of the
Payment of tax death of a person, who
antecedent to the maintained a bank deposit
transfer of shares, account alone, or jointly with
bonds, or rights another, it shall not allow any
withdrawal from the said deposit
account unless the Commissioner
has certified that the taxes
imposed thereon have been paid.
TRAIN Briefing – Transfer Taxes
VER 1.0 – January 2018
TRAIN
If a bank has knowledge of the death
of a person, who maintained a bank
deposit account alone, or jointly with
another, it shall allow any
withdrawal from the said deposit
account, subject to a final
withholding tax of (6%).
Donor’s Tax
NIRC NIRC TRAIN
Provision
Section 99 The donor’s tax for each calendar year shall be The donor’s tax for is fixed at 6% based
Rates of tax computed on the basis of the total net gifts made on annual total gifts exceeding
during the calendar year in accordance with the ₱250,000 (exempt gift), regardless of
graduated tax table. whether the done is a stranger or not.
NET GIFT TAX NET GIFT TAX
Not over ₱100,000 Exempt Over ₱1M but ₱44,000 + 8% of the
Over ₱100,000 but 2% of the excess not over ₱3M excess over ₱1M
not over ₱200,000 over ₱100,000 Over ₱3M but ₱204,000 + 10% of
Over ₱200,000 but ₱2,000 + 4% of not over ₱5M the excess over ₱3M
not over ₱500,000 the excess over Over ₱5M but ₱404,000 + 12% of
₱200,000 not over ₱10M the excess over ₱5M
Over ₱500,000but ₱14,000 + 6% of Over ₱10M ₱1,004,000 + 15% of
not over ₱1M the excess over the excess over
₱500,000 ₱10M

TRAIN Briefing – Transfer Taxes

VER 1.0 – January 2018
Donor’s Tax
NIRC Provision NIRC TRAIN
Section 99 The donor’s tax shall be 30% of The donor’s at is fixed at 6% based
Rates of tax the net gifts when the done or on annual total gifts exceeding
beneficiary is a stranger. ₱250,000 (exempt gift) regardless of
whether the donee is a stranger or
not.

TRAIN Briefing – Transfer Taxes

VER 1.0 – January 2018
Donor’s Tax
NIRC Provision NIRC
Section 100 The amount by which the fair
Transfer for less market value of the property
than adequate transferred exceeded the value of
consideration the consideration received for
such transfer, shall for purpose of
donor’s tax, be deemed a gift and
included in computing the amount
of gifts made during the year.
TRAIN Briefing – Transfer Taxes
VER 1.0 – January 2018
TRAIN
Additional proviso:
Even if the sale, exchange or other
transfer of property is for an
insufficient consideration, the same
will still be considered made for
adequate and full consideration
provided that such transfer is made
in the ordinary course of business,
i.e.,:
 A bona fide transaction;
 At arm’s length; and
 Free from donative intent.
Donor’s Tax
NIRC Provision NIRC TRAIN
Section 101 Dowries or gifts made on account The exemption of dowries (gifts
Exemption of of marriage by parents to each of made on account of marriage) is
certain gifts their legitimate, recognized , removed.
natural, or adopted children to the
extent of the first ₱10,000 shall be
exempt from donor’s tax.

TRAIN Briefing – Transfer Taxes

VER 1.0 – January 2018