Estate Tax Philippines: Rates, Deadlines, and BIR Requirements

(Philippine context, practitioner-style guide — updated to the best of my knowledge as of June 2024.)

Quick take: Philippine estate tax is a flat 6% on the net estate of the decedent. File the estate tax return within 1 year from the date of death. Key reliefs include a ₱5,000,000 standard deduction, up to ₱10,000,000 family home deduction, and exclusion of the surviving spouse’s share of community/conjugal property. BIR issues an eCAR (electronic Certificate Authorizing Registration), which is the non-negotiable clearance for transferring titles, shares, vehicles, and bank accounts.

1) Legal basis & scope

National Internal Revenue Code (NIRC) as amended (notably by the TRAIN Law).
Implementing rules and BIR issuances on valuation, filing, extensions, eCAR, and documentary requirements.

Who is taxed? The estate of a deceased person (citizen or alien). What is taxed? The net estate (gross estate less allowable deductions and exclusions), subject to situs rules described below.

2) Who must file and where

Primary filer: The executor or administrator; if none, any heir may file.
Where to file: The RDO (Revenue District Office) having jurisdiction over the decedent’s last residence in the Philippines; for nonresidents, the RDO where the executor/administrator is registered (or as directed by BIR practice).

3) Tax rate and when it applies

Flat rate: 6% on the net estate (no brackets).
When due: Upon filing of the estate tax return (see deadlines below).

4) Deadlines, extensions, installments, and penalties

A) Filing & payment deadline

File and pay within 1 year from date of death.

B) Extensions

Extension to file: Granted for meritorious reasons (BIR discretion).
Extension to pay / installments: If payment on time will impose undue hardship or the estate is illiquid, the BIR may allow installments or extend payment up to 5 years (if the estate is under court settlement) or up to 2 years (if extrajudicial). Security (e.g., bond/lien) may be required.

C) Surcharge & interest (for late/deficient cases)

Surcharge: 25% (general late filing/payment) or 50% (willful neglect or fraudulent return).
Interest: Generally double the legal interest rate per annum (e.g., 12% p.a. if legal rate is 6%), computed on deficiency or delinquency.

5) What goes into the gross estate

Include all property interests of the decedent at death, plus certain transfers:

Real and tangible personal property.
Intangible property (e.g., stocks, bank deposits, receivables, crypto/digital assets) — see situs rules below.
Transfers in contemplation of death, revocable transfers, and property passing under a general power of appointment.
Proceeds of life insurance if (a) receivable by the estate, executor, or administrator, or (b) the beneficiary designation was revocable by the decedent.

Situs (location) rules (high level):

Citizens/residents: Taxed on worldwide property.
Nonresident, not a citizen (NRNA): Only Philippine-situated property is included:
- Real property in the Philippines.
- Tangible personal property located in the Philippines.
- Intangibles with Philippine situs (e.g., shares in domestic corporations, franchises exercised in the Philippines, and certain foreign shares with substantial business in the Philippines).
- Reciprocity rule for intangibles of NRNAs: Intangibles in the Philippines may be exempt if the foreign country does not impose transfer taxes on similar intangibles of Philippine decedents or grants equivalent exemptions (proof required).

6) What is excluded from the gross estate

Surviving spouse’s share in the absolute community or conjugal partnership (this is not a deduction; it’s excluded before arriving at the net estate).
Life insurance proceeds where the beneficiary designation is irrevocable and the beneficiary is not the estate/executor/administrator.
Intangibles of NRNAs qualifying under the reciprocity exemption (see above).

7) Valuation rules (date-of-death values)

General rule: Value assets at fair market value on date of death.
Real property: Use the higher of (a) BIR zonal value or (b) Assessor’s fair market value (tax declaration).
Listed shares: Market price on date of death (or nearest trading day if no trading).
Unlisted common shares: Book value as of date of death.
Unlisted preferred shares: Typically par value.
Personal property (cars, jewelry, art, business assets, crypto): Fair market value on date of death, supported by credible documents (appraisals, statements, FS).

Tip: Document your valuation basis (zonal value printout, tax declarations, broker certifications, appraisals, bank certificates, FS).

8) Allowable deductions (how you reduce the gross estate)

For citizens/residents

Standard deduction: ₱5,000,000 (no substantiation beyond proof of death required, but claim it in the return).
Family home deduction: Up to ₱10,000,000, provided the property is the family home and included in the gross estate (documentation required).
Claims against the estate (debts): Valid, enforceable debts existing at the time of death, properly substantiated (see documentary requirements below).
Unpaid mortgages/liens: Provided the corresponding asset is included in gross estate.
Claims of the decedent against insolvent persons (to the extent uncollectible).
Losses during settlement (e.g., fire/theft) not compensated by insurance and occurring before estate tax payment, subject to conditions.
Transfers for public use (property transferred by the decedent to the Government or political subdivisions for exclusively public purposes).
Property previously taxed (vanishing deduction): If the decedent acquired property by donation or inheritance and that transfer was taxed within 5 years before the decedent’s death, a percentage of that property’s value may be deducted:
- 100% if the prior transfer was within 1 year,
- 80% (>1 to 2 years),
- 60% (>2 to 3 years),
- 40% (>3 to 4 years),
- 20% (>4 to 5 years). (Subject to conditions and interaction with other deductions.)

Removed under TRAIN: the old funeral and medical expense deductions. Use the ₱5M standard instead.

For nonresident, not a citizen (NRNA)

Pro-rata deduction: Most deductions are allowed in proportion to the ratio of Philippine gross estate to worldwide gross estate (documentation needed to establish the denominator).
Standard deduction: ₱500,000 (available only to NRNAs).
No family home deduction for NRNAs (family home rule applies to citizens/residents).

9) The surviving spouse’s share (community/conjugal property)

Where spouses are under absolute community or conjugal partnership, do not lump the entire community property into the decedent’s gross estate. Steps:

Determine gross community/conjugal assets.
Subtract community/conjugal liabilities to get net community property.
Split 50–50: The surviving spouse’s 50% is excluded; the decedent’s 50% moves forward as part of the gross estate.
Then apply deductions (standard, family home, claims, etc.) to arrive at the net estate.

10) Simple computation example (resident decedent)

Assets: Family home FMV ₱14,000,000; bank deposits ₱2,000,000; car ₱1,000,000 → Gross estate ₱17,000,000.
Assume all are exclusive properties of the decedent (no conjugal split).
Deductions:
- Standard ₱5,000,000
- Family home (cap) ₱10,000,000
Net estate: ₱17,000,000 − ₱15,000,000 = ₱2,000,000
Estate tax (6%): ₱120,000

(If assets were conjugal/community, first carve out the spouse’s net share as excluded before applying deductions.)

11) Documentary requirements (what the BIR typically asks for)

Always attach BIR Form 1801 (Estate Tax Return). Use eBIRForms if applicable, and keep the transmittal/eAFS proof for attachments if filed electronically.

Core documents (nearly always required):

Certified true copy of the Death Certificate.
TINs of the decedent, the estate (apply via BIR Form 1904 as a one-time taxpayer), and often the heirs.
Proof of relationship: Marriage certificate, birth certificates of heirs; if adopted, decree of adoption.
Affidavit/List of Heirs; if extrajudicial, the Extrajudicial Settlement (EJS) — notarized and, if with real property, typically published once a week for 3 consecutive weeks in a newspaper of general circulation (per Civil Code/Rules).
Inventory/Statement of Assets and Liabilities as of date of death.

Per asset class (submit as applicable):

Real property:
- Certified true copy of TCT/CCT.
- Latest Tax Declarations (land & improvement) and sometimes Certificate of No Improvement.
- BIR zonal value printout (or proof of valuation basis).
- Real property tax (RPT) clearance, if requested.
Bank deposits/time deposits/e-money:
- Bank certificate of balance as of date of death (incl. accrued interest).
- Bank statements (support).
- Note on withdrawals (below).
Stocks/shares:
- Certificate from corporate secretary/transfer agent stating number of shares and FMV (for listed: market price at date of death; for unlisted: book value; for preferred: par).
- Stock certificates (if certificated).
Vehicles:
- LTO Certificate of Registration/Official Receipt; deed of sale (if applicable); valuation support.
Business interests/sole prop/partnership:
- Audited financial statements, trial balance, inventory and valuation of assets.
Foreign property:
- Title/evidence of ownership, valuation at date of death, currency conversion workings; for NRNAs, documents to establish worldwide estate for pro-rata deductions.

To claim debts/claims against the estate (strictly documented):

Notarized debt instrument (loan agreement, promissory note).
Proof of loan proceeds received by the decedent and use of the funds.
Creditor’s certification (and, for related-party loans or loans contracted shortly before death, extra substantiation such as creditor’s financial capacity).

To claim the family home deduction:

Show that the property is the family home (affidavit, barangay certificate, IDs/bills) and that it is included in the gross estate. Submit title and tax declarations.

12) Bank withdrawals from the decedent’s accounts

Banks freeze accounts at notice of death.
Withdrawal may be allowed before eCAR issuance subject to a 6% withholding (credited later to the estate tax), or upon presentation of eCAR and BIR instructions. Actual bank practice varies, but eCAR is ultimately required to fully release/transfer funds.

13) The eCAR (electronic Certificate Authorizing Registration)

Issued per property class (e.g., per parcel, per vehicle batch, per stock batch).
Mandatory for Register of Deeds, LTO, corporate transfer agents, and banks to change title/ownership.
BIR releases the eCAR after filing, payment, and documentary review (plus DST and other taxes if applicable to the transfer documents).

14) Special situations and planning notes

Nonresident decedents (NRNAs): Only PH-situs assets are taxable; pro-rata deductions and ₱500,000 standard apply; no family home deduction. Consider reciprocity for intangibles.
Trusts & powers of appointment: Assets transferred subject to revocation or general power of appointment can be pulled back into the gross estate.
Gifts made shortly before death: May be treated as in contemplation of death (facts & intent matter).
Community/conjugal property pitfalls: Always compute net community property then split 50–50 before deductions.
Digital assets/crypto: Treat as intangible property; keep exchange statements and wallet records to substantiate holdings and valuation at date of death.
Life insurance: Keep the policy and endorsements; irrevocable beneficiary designations are crucial to exclusion.

15) Estate Tax Amnesty (context as of 2024)

Congress enacted an estate tax amnesty covering older estates (originally for deaths on or before Dec 31, 2017, with later extensions and coverage expansion).
As of June 2024, the amnesty had been extended (with a new deadline then set to June 14, 2025 and broader coverage). If you’re dealing with an older estate, check whether amnesty (and its fixed rates & simplified requirements) still applies or has lapsed at the time of your filing.

16) Practical filing workflow (checklist)

Secure TINs: decedent (if none), estate (BIR 1904), and heirs.
Inventory assets & liabilities (as of date of death); gather valuation proofs.
Determine property regime (absolute community, conjugal partnership, or separation) and carve out the spouse’s share.
Compute gross estate → deductions → net estate → 6% tax.
Prepare BIR Form 1801, attach requirements; file and pay within 1 year (seek extension/installments early if needed).
Secure eCAR from the BIR.
Transfer titles (RD/LTO/transfer agents/banks) using eCAR and required transfer documents.

17) Frequent pain points (and how to avoid them)

Missing debt substantiation → debt deduction disallowed. Keep notarized notes and proof of funds received/used.
Wrong valuation base for real property → deficiency assessments. Use the higher of zonal value or assessor’s FMV.
Forgetting the spouse’s share → overpaying tax. Always split net community property first.
No TIN for the estate → filing/payment snags. Apply via BIR 1904 early.
Delays in eCAR due to incomplete attachments. Submit a complete, indexed set; respond promptly to BIR queries.
Bank account access before eCAR. Coordinate with the bank; expect 6% withholding if allowed pre-eCAR.

18) Frequently asked numbers (at a glance)

Rate: 6% of net estate.
File & pay: Within 1 year from date of death.
Standard deduction (citizens/residents): ₱5,000,000.
Family home deduction: up to ₱10,000,000.
Standard deduction (NRNA): ₱500,000.
Extensions to pay: up to 5 years (court-settled) or 2 years (extrajudicial), subject to BIR approval.
Surcharge: 25% (late) or 50% (fraud/willful neglect).
Interest: generally double the legal interest rate p.a. (e.g., 12% if legal rate is 6%).

19) Final notes & disclaimer

The summary above reflects Philippine rules as of June 2024 and long-standing BIR practice. Rules on amnesty windows, interest rates, e-filing/e-attachment mechanics, and specific documentary checklists can change by issuance.
For a live case, it’s prudent to (a) read the latest BIR Revenue Regulations/RMCs implementing estate and donor’s tax, and (b) confirm RDO-specific checklists before filing.

If you’d like, tell me your fact pattern (assets, property regime, date of death, resident status), and I’ll draft a tailored computation checklist you can file against.