Estate Tax Requirements and Procedures in the Philippines

A practitioner-oriented explainer incorporating the latest statutory and regulatory issuances (as of 5 July 2025)

1. Legal Foundations

Level	Issuance	Key Points
Constitution	1987 Const., Art. VI §28(1)	Congress may levy inheritance taxes.
Statute	National Internal Revenue Code (NIRC), as amended by RA 10963 (TRAIN, 2018)	Sets the present single 6 % rate and mechanics.
	RA 11213 (Estate Tax Amnesty Act, 2019), RA 11569 (2021) & RA 11956 (2023)	Time-bound amnesties for estates where the decedent died ≤ 31 Dec 2021, now extended until 14 June 2025.
Regulations	• RR 12-2018 (estate tax under TRAIN) • RR 15-2019 & 17-2021 (amnesty) • RR 2-2003, RR 7-2021 et al.	Flesh out forms, valuation rules, documentation.
BIR Rulings	Numerous, e.g., BIR Ruling 242-2022 (CAR issuance), 058-2024 (family home valuation).
Case law	Heirs of Diaz v. Republic (GR 215089, 04 Aug 2021) — valuation date final; People v. Lim (GR 234359, 16 Feb 2022) — failure to file/withhold is both civil and criminal if wilful.

2. Core Concepts

Term	Practical Meaning	Where Found
Estate	All properties, rights & obligations transmissible at death.	Civil Code Art. 776 et seq.
Gross Estate	FMV at death of worldwide assets (if decedent resident citizen) or Philippine-situs assets (if non-resident).	NIRC §85
Net Estate	Gross estate minus deductible expenses, losses, debts & standard deduction ₱5 million plus family-home deduction up to ₱10 million.	§86(A)
Executor/Administrator	Person in charge of settlement; personally liable for estate tax if property distributed without clearance.	§91
CAR	Certificate Authorizing Registration — BIR clearance for title transfer.	RR 2-2003

3. Estate‐Tax Rate & Computation (post-TRAIN)

Determine Gross Estate
- Real property: use higher of zonal value or fair-market value per city/municipal assessor on date of death.
- Listed shares: closing price on valuation date.
- Unlisted shares: book value; preferred shares at par.
- Bank deposits/other intangibles: outstanding balance plus earned interest.

Subtract Allowable Deductions

Deduction	Ceiling / Notes
Standard	₱5,000,000 straight deduction — no substantiation.
Family Home	FMV up to ₱10,000,000; excess flows back to net estate.
Claims vs. Estate	Debts existing at death, duly notarized and supported by loan documents & Sched. F declaration.
Expenses, Losses & Taxes	Funeral (< ₱200k or 5 % GE whichever lower), judicial expenses, casualty losses within 1 yr.
Vanishing Deduction	For property subjected to donor/estate tax within 5 yrs prior.
Phil. Govt. Securities	100 % deductible.

Net Estate × 6 % = Estate Tax Due Minimum tax is effectively zero if net estate ≤ ₱200 k.

4. Filing & Payment Procedures

Step	Who	When	How / Where
TIN issuance	Each heir & the estate (if none yet)	Before filing	Use BIR TIN for Estate facility.
Prepare BIR Form 1801 (Estate Tax Return)	Executor, administrator, or any heir if extrajudicial settlement (EJS)	Within 1 year from death; extensions up to 30 days (filing) or 5 yrs (payment) possible for meritorious causes via BIR LOA.	• eFPS or eBIRForms if e-filers; • Otherwise manual filing at Revenue District Office (RDO) where decedent was resident.
Attachments	Authentic/photocertified: • PSA death cert. • Affidavit of self-adjudication / EJS or court letters testamentary • Notarized schedule of assets & liabilities • Certified OCT/TCT, tax declarations, zonal valuation printouts • Stock certificates, bank certs. • Proof of debts • Marriage/birth certificates of heirs.
Payment	Cash, check, debit/credit via AAB; e-wallets via PayMaya/GCash for ≤ ₱50k; or installment (max 2 yrs) if cash deficit shown.
Secure CAR (per asset class)	BIR RDO	Typically 10-20 days processing (longer if zonal re-valuation).	Present proof of payment & originals; CAR required by Registry of Deeds/LTFRB/LTO, etc. before transfer.

5. Special Contexts & Nuances

5.1 Estate Tax Amnesty (RA 11213, as extended)

Coverage: Estates of decedents who died on or before 31 December 2021 with or without previously filed returns.
Tax Rate: 6 % of net undivided estate OR FMV of each property at time of filing (whichever is higher), without penalties & interest, minimum ₱5k per estate.
Period: 15 June 2019 – 14 June 2025 (hard deadline; no further extension contemplated).
Return: BIR Form 2118-E plus notarized Estate Amnesty Declaration.
Effect: Immunity from civil, criminal, administrative liabilities & removal of tax liens.
Not Allowed: Pending cases involving “assets of illicit origin”, i.e., Anti-Money Laundering Act violations.

5.2 Non-Resident Decedent

File with RDO No. 39 (South Quezon City).
Deduction for Philippine-situs property only; reciprocity rule removes Philippine estate tax on intangibles if decedent’s country exempts Filipinos.

5.3 Shares & Bank Deposits “Freezing”

Banks must withhold 6 % before release if no CAR yet; release of 50 % allowed upon presentation of BIR Clearance for Withdrawals (RR 9-2023).
Corporations cannot transfer shares on books without CAR.

5.4 Partition Without Prior CAR

Distribution without settlement attracts 25 % surcharge + 12 % interest p.a. and possible prosecution for heirs/executor.
Registry of Deeds/LTO will not register deeds absent CAR, but heirs sometimes execute “affidavit of heirship” — still exposes them to liability.

5.5 Judicial vs. Extrajudicial Settlement

Mode	When Available	Notes
Extrajudicial (EJS)	All heirs of legal age, no will, no debts or debts fully paid.	File EJS deed, publish once a week for 3 consecutive weeks in general-circulation newspaper.
Judicial	There is a will, or minors/heirs disagree, or estate is indebted.	Court issues letters testamentary/administration; estate tax return filed by administrator.

6. Penalties & Remedies

Violation	Civil Additions	Criminal Liability*
Late filing/payment	25 % surcharge (50 % if wilful or fraudulent) + interest 12 % p.a.	Fine ₱10 k–₱100 k + imprisonment 1–10 yrs if wilful (§255).
Under-declaration (> 30 %)	50 % surcharge + compromise penalty	Same as above; plus potential perjury (false affidavit).
Distribution without CAR	Transferee & executor become personally liable for tax + additions	Possible estafa if intent to defraud.

*Criminal action requires willfulness and a DOJ complaint; BIR may recommend prosecution.

7. Step-by-Step Checklist for Practitioners

Gather documents within 30 days of death; secure certified copies.
Inventory assets & obtain valuations (zonal, book, bank certs.).
Compute tentative tax; explore installment or amnesty eligibility.
Obtain TIN for estate & non-TIN heirs.
Prepare Form 1801 (or 2118-E for amnesty) and supporting schedules.
File & pay at correct RDO/AAB within 1 year (or amnesty deadline).
Apply for CAR; follow-up every 7 days; secure eCAR if available.
Transfer titles/registrations within 2 yrs to avoid higher zonal valuations.
Retain records for 10 years; BIR may audit within 3 yrs from filing (or 10 yrs if false/fraudulent).

8. Frequently-Misunderstood Points

Myth	Reality
“The estate tax was abolished by TRAIN”	TRAIN simplified it to a flat 6 %; it still exists.
“If the estate is ≤ ₱5 M we need not file”	Return is mandatory if any asset has a title or needs transfer by CAR, even if net tax zero.
“Bank deposits are automatically released after 1 year”	Banks remain liable; they require CAR or BIR withdrawal clearance.
“Zonal values are optional; just use assessed value”	Use higher of zonal vs. assessor’s FMV; BIR rejects undervalued filings.
“Amnesty covers future deaths up to 2025”	No. Coverage is fixed on date of death (≤ 31 Dec 2021).

9. Looking Ahead

Legislators have floated bills to make the ₱5 M standard deduction adjustable to inflation and to digitalize CAR issuance. Practitioners should monitor forthcoming BIR regulations, especially on fully-online estate settlement.

Prepared by: ________________

(For educational purposes; not a substitute for formal tax opinion or BIR ruling.)