Estate Tax Rates and Requirements in the Philippines (Comprehensive legal guide as of 21 June 2025)
1. Statutory Framework
| Level | Issuance | Key Effects |
|---|---|---|
| Primary law | National Internal Revenue Code (NIRC), 1997, as last amended by the Tax Reform for Acceleration and Inclusion (TRAIN) Act, Republic Act (RA) 10963 (effective 1 Jan 2018) | Re-wrote the estate-tax rate schedule, streamlined deductions, introduced e-filer rules |
| Estate Tax Amnesty Act, RA 11213 (2019) + amendments RA 11569 (2021) & RA 11956 (2023) | Grants a limited-period 6 % amnesty on estates of decedents who died on or before 31 May 2022; payment window now until 14 June 2025 | |
| Implementing regs. | BIR Revenue Regulations (RRs) 12-2018, 17-2021, 3-2023, 6-2023, 8-2023, 1-2024, plus dozens of Revenue Memorandum Circulars (RMCs) | Flesh out forms, eCAR, electronic one-time transaction (eONETT) system, valuation grids, documentary checklists |
| Judicial guidance | Occasional Supreme Court decisions (e.g., Sandoval v. BIR, Estanislao v. Comm.) | Resolve valuation controversies, clarify “claims against estate,” due-process rights, etc. |
2. Current Estate-Tax Rate
| From | To | Rate | Notes |
|---|---|---|---|
| 1 Jan 2018 – present | — | Flat 6 % of net estate | No graduated brackets; the rate applies per entire estate. Prior withheld/final taxes (e.g., CGT on sales before death) are ignored in computing estate tax. |
Historical reference (for pre-2018 deaths): Prior to TRAIN the NIRC imposed a 6-tier schedule ranging from 5 % to 20 % of net estate in excess of ₱200,000. Those rates still govern estates of decedents who died before 1 Jan 2018 unless the estate opts into the amnesty.
3. Defining the Tax Base
3.1 Gross Estate (Sec. 85, NIRC) All property—real, personal, tangible, intangible—wherever situated if the decedent was a Philippine resident citizen; if non-resident or non-citizen, only Philippine-situs property. Items commonly included:
- Land, buildings, condominium units
- Valuable personalty (vehicles, jewelry, artworks, collectibles)
- Cash and bank deposits (including joint accounts¹)
- Insurance proceeds payable to the estate, “revocable-type” transfers, transfers in contemplation of death
- Shares, bonds, business interests (sole proprietorship, partnership equity)
¹Joint “and/or” deposits are automatically frozen by banks until BIR eCAR is shown, per RR 12-2018.
3.2 Allowable Deductions (Sec. 86, as amended)
| Category | Cap / Rule (post-TRAIN) |
|---|---|
| Standard deduction | ₱5 million (automatic; no substantiation) |
| Family-home deduction | Up to ₱10 million of the current zonal/assessed value of the decedent’s legally constituted family home |
| Funeral expenses | Actual but not exceeding 5 % of gross estate or ₱200,000, whichever is lower |
| Medical expenses | Actual within 1 year before death, capped at ₱500,000 |
| Debts & claims against estate | Valid, enforceable, secured/unsecured; must be properly notarized and contracted in good faith before death |
| Claims against insolvent persons & losses during settlement | Subject to proof; losses must occur not later than last day for filing return |
| Transfers for public use | Donations to gov’t or accredited NGOs |
| Net share of surviving spouse | ½ of conjugal/community property net of conjugal obligations |
| Previously taxed property (vanishing deduction) | 100 %→20 % spread over 5 yrs for property received from prior decedent and again subjected to estate tax |
| Foreign estate tax credit | Up to proportionate share of PH estate tax attributable to foreign-situs property |
A CPA certification is mandatory if either (a) the gross estate > ₱5 million or (b) the claimed deductions > ₱5 million.
4. Valuation Rules (Sec. 88)
| Asset | Basis as of date of death |
|---|---|
| Real property | Higher of: (i) BIR zonal value; (ii) LGU fair-market value (tax declaration); or (iii) actual consideration (if any sale) |
| Listed shares | Average of the closing price for the day |
| Unlisted common shares | Book value per latest audited FS prior to death |
| Unlisted preferred shares | Par value |
| Money market, time deposits, foreign currency | Actual principal + accrued interest, converted using Bangko Sentral reference rate on date of death |
| Usufruct / annuities | Capitalized at 12-month Philippine Treasury Bill rate, per BIR tables |
5. Compliance Timelines & Mechanics
| Item | Period / Action |
|---|---|
| Estate tax return (BIR Form 1801) | File within 1 year from date of death (Sec. 90). Extensions of up to 30 days for filing and up to 5 years for payment require a written request showing undue hardship and posting of a surety bond. |
| Payment | Full amount upon filing, or installment over 2 years if estate liquidity is lacking (Sec. 91). Interest of 12 % p.a. and surcharge of 25 % (or 50 % for willful neglect/fraud) apply to late payments. |
| Where to file/pay | Revenue District Office (RDO) where the decedent was domiciled. Non-resident decedents: RDO 39 (South Quezon City – Large Taxpayers). EONETT allows e-filing and e-payment in select pilot RDOs. |
| BIR clearance | Issuance of eCAR per asset (or “global” eCAR if the estate is settled in one deed). Required before Land Registries, LTO, SEC, and banks allow title/ownership transfer. |
6. Documentary Requirements (core list)
Certified true copy of Death Certificate
TIN of the Estate (secure online or from RDO)
Notarized List of Heirs, with citizenship and TINs
Settlement documents:
- Judicial: Letters testamentary/administration, inventory & appraisal
- Extra-judicial: Deed of Extra-Judicial Settlement (EJS) + publication; or Affidavit of Self-Adjudication (sole heir)
Schedule of Assets & Liabilities (per Annexes in RR 12-2018)
Proof of valuation: certified titles, tax declarations, zonal-value certification; bank balance certificates; stock certificates & SEC-certified FMV schedules
Proof of deductions: official receipts for funeral/medical, notarized debt instruments, proofs of insolvency, etc.
CPA certificate (if thresholds met)
Official Receipts of estate tax and of publication (for extra-judicial cases)
BIR-issued Tax Debit Memo (if settlement via tax credit)
(Individual RDOs routinely publish 2–3-page checklists; always verify the latest version to avoid repetitive appearances.)
7. Estate Tax Amnesty (2019-2025)
| Feature | Core Rule |
|---|---|
| Who may avail | Estates of decedents who died on or before 31 May 2022 and whose estate-tax liabilities remain unpaid as of 14 June 2025. |
| Rate | 6 % of (a) total net taxable estate or (b) per asset’s FMV (heirs may pay per-property when no full settlement is possible). |
| Minimum tax | ₱5,000 per return. |
| Returns & payment | Use BIR Form 2118-E; filings allowed at any Authorized Agent Bank or RDO. |
| Immunities | Full waiver of surcharge, interest, penalties; immunity from civil, criminal, and administrative cases relative to unpaid estate tax. |
| Exclusions | Estates with properties involved in anti-money-laundering, unexplained wealth, or assets with final/executory tax fraud findings. |
| Proof of availment | eCAR stamped “Amnesty” and RDO certification that amnesty has been fully complied with. |
Tip: The amnesty is often the cheapest route for long-unsettled family estates because (a) penalties frequently exceed basic tax and (b) the period also suspends the requirement to prove deductions.
8. Frequently Litigated Issues
- Late-filed returns & prescription. Estate tax is assessed within 3 years from filing; if no return is filed, BIR may assess anytime.
- Bank deposit freezes. Even joint accounts are blocked until eCAR; the bank officer faces personal liability under Sec. 97 NIRC for premature release.
- Foreign-situs shares & reciprocity. Intangible property of non-resident aliens is estate-tax-exempt if their home country similarly exempts Filipino decedents (reciprocity rule).
- Partition without eCAR. Register of Deeds rejects any deed of partition affecting real property absent accompanying eCAR(s).
- CPA certification errors. Misstatements by CPAs may trigger professional liability and 50 % fraud surcharge on heirs.
9. Practical Workflow Checklist
- Within 2 weeks of death: Secure death certificate & gather asset documents. Obtain estate TIN.
- Within 3 months: Decide on judicial vs. extra-judicial settlement. Publish EJS if chosen.
- Month 4–6: Obtain property valuations; marshal debts and medical/funeral receipts.
- Month 7–9: Draft BIR Form 1801 or (if qualified) Form 2118-E for amnesty. Secure CPA sign-off if needed.
- Month 10–12: File return and pay tax (or initial installment).
- Post-payment: Follow up for eCAR; present to Registry of Deeds/SEC/banks for transfer.
- Final: Update tax declarations & secure new TCT/CCT or stock certificates in the heirs’ names.
(If the estate is illiquid, concurrently prepare application for installment or extension citing specific assets vs. cash ratios.)
10. Penalties and Criminal Liability (Sec. 247–255, NIRC)
| Violation | Civil Penalty | Criminal Exposure |
|---|---|---|
| Failure to file return or pay | 25 % surcharge + 12 % p.a. interest | ₱10,000–₱1 million fine and/or 1–10 years imprisonment |
| Willful understatement >30 % | Additional 50 % fraud surcharge | Same as above; plus accessory penalties (revocation of licenses) |
| Bank officer releasing funds without eCAR | Personal liability equal to tax due | Same fine/imprisonment bracket |
11. Key Take-Aways
- Paying 6 % is now the rule, but heirs must still document the estate fully because the tax base is net estate.
- One-year clock starts on date of death, not on discovery of assets. Heirs should begin gathering documents immediately.
- Amnesty window (until 14 June 2025) remains the best exit-strategy for long-delinquent estates.
- eCAR is your “golden ticket”; without it, no asset transfer—land, car, share, or bank account—will be recognized.
- Documentation quality (proper valuation, notarized debts, CPA certification) is the biggest driver of speed; sloppy filings invite BIR audits and surcharges.
12. Suggested Further Reading
- National Internal Revenue Code of 1997 (annotated editions)
- BIR Revenue Regulations 12-2018, 17-2021, 3-2023, 8-2023
- Supreme Court Reports Annotated (estate-tax jurisprudence)
- Bureau of Internal Revenue eONETT and eCAR user manuals
Prepared by: [Your Name], Philippine tax and estate-planning practitioner