Estate Tax in the Philippines
Compliance, Rates, and Practical Guidance under the NIRC (as amended by the TRAIN Law and later issuances)
1. Statutory Foundation
| Source | Key Provisions |
|---|---|
| National Internal Revenue Code (NIRC), as amended | Secs. 84-97: definition of gross/net estate, deductions, filing & payment, extensions, penalties. |
| TRAIN Law (Republic Act No. 10963, effective 1 Jan 2018) | Flattened the progressive schedule (5-20 %) to a single 6 % rate; introduced higher deductions and filing thresholds. |
| Estate-Tax Amnesty Law (RA 11213, 2019) + extensions (RA 11569 & RA 11956) | Gave heirs of decedents who died on or before 31 Dec 2021 until 14 June 2025 to pay estate tax at 6 % on the net undeclared estate without penalties, subject to conditions. |
| Revenue Regulations & Circulars | RR 12-2018 (implementing TRAIN), RR 13-2021 (eCAR streamlining), RMCs 24-2019, 33-2022, 69-2023, etc. |
2. When Is Estate Tax Due?
| Trigger | Deadline | Return Form |
|---|---|---|
| Death of decedent (resident or with Philippine-situs property) | Within 1 year of death (Commissioner may grant up to two 1-year extensions for meritorious reasons) | BIR Form 1801 “Estate Tax Return” |
Tip: File even earlier if you intend to sell or transfer any estate asset; the BIR will not issue an electronic Certificate Authorizing Registration (eCAR) until the tax is settled.
3. Determining the Gross Estate
| Asset Type | Valuation Rule (snapshot on date of death) |
|---|---|
| Real property | Higher of zonal value vs. fair market value per assessor (or actual selling price if higher). |
| Shares of stock | Listed: closing price; Unlisted: book value from latest audited FS (resident) or net equity (non-resident). |
| Personal property | Actual market value. |
| Insurance proceeds | Include only if revocable beneficiary or insurance “for the benefit of the estate.” |
| Franchise, rights, royalties, etc. | Fair market value. |
Situs rules
- Real property: wherever located.
- Tangible personals: where located.
- Intangibles of non-resident alien: taxable only if (a) issued by Philippine entity and (b) no reciprocity (i.e., foreign country also taxes similar Philippine-situated intangibles).
4. Allowable Deductions (Resident or Citizen Decedent)
| Deduction | Ceiling / Notes (TRAIN Rules) |
|---|---|
| Standard deduction | ₱5 million (no substantiation needed). |
| Family home | Lower of FMV or ₱10 million; excess is taxable. |
| Funeral expenses | Actual, but ≤ 5 % of gross estate and ≤ ₱200 k. |
| Claims against the estate | Valid, legally enforceable debts in writing and duly notarized when incurred. |
| Unpaid mortgages, taxes, casualty losses | Subject to substantiation and specific conditions. |
| Transfer for public use | Donations to national gov’t or its subdivisions. |
| Property previously taxed (vanishing deduction) | Graduated relief if property was subjected to donor’s/estate tax within 5 years. |
| Share of surviving spouse (conjugal or ACP) | One-half of the net conjugal/ACP property is deducted first to arrive at decedent’s gross estate. |
Non-resident alien: Deductions are pro-rata—multiply each allowable deduction by Philippine-gross / Worldwide-gross.
5. Net Estate & 6 % Flat Rate
Estate Tax = 6 % × (Gross Estate − Deductions)
The tax is computed on net estate (after deductions). There is no longer a progressive bracket nor a tax-free threshold; the benefit is captured in the higher deductions.
6. Filing & Documentary Checklist
BIR Form 1801 (3 copies).
Certified true copy of Death Certificate.
TIN of the Estate (apply via BIR Form 1904) and of each heir.
Schedule of Assets & Liabilities (with valuation documents).
Notarized settlement documents:
- Extrajudicial Settlement (EJS) + proof of publication or
- Probate court Orders/Bonds.
Certified copies of Titles, Tax Declarations, LTO certificates, Stock certificates.
Certification of share prices (for listed shares) or audited FS (for unlisted).
Proof of debts & expenses (notarized).
Estate Tax Amnesty return (BIR Form 2118-E) if availing.
Payment confirmation (bank eFPS, G-Cash, LANDBANK, etc.).
After validation, the BIR issues an eCAR for each parcel of real property, vehicle, or share block—this is the indispensable clearance for transfer with the Registry of Deeds, LTO, or stock transfer agent.
7. Payment Mechanics, Extensions & Installments
| Mode | Conditions |
|---|---|
| Cash / Check / e-Payment | Full amount on filing date. |
| Installment (within 2 years) | Allowed only if paying is unduly hard for the estate and provided a surety bond is posted. |
| Extension to pay | Up to 5 years (judicially-settled) or 2 years (extrajudicial), subject to interest (12 % p.a.) and, if late, 25 % surcharge. |
| Estate Tax Amnesty | 6 % of net undeclared estate; no surcharge, interest, or penalties; deadline 14 June 2025. |
8. Penalties for Non-Compliance
| Violation | Add-On |
|---|---|
| Late filing or payment | 25 % surcharge + interest at 12 % p.a. (rate equals double BSP legal interest). |
| Willful neglect or fraudulent return | 50 % surcharge + interest. |
| Civil & criminal prosecution | Possible under Secs. 253-255, 257 NIRC. |
9. Instances Where No Return Is Required
Under Sec. 90(C) NIRC (as amended), no Estate Tax Return if all these are true:
- Net estate ≤ ₱5 million, and
- The estate consists solely of a family home with a gross value ≤ ₱10 million.
Nonetheless, eCAR is still necessary to transfer titles, so informal estates often file voluntarily.
10. Special Topics & Practical Pointers
| Situation | Guidance |
|---|---|
| Non-resident decedent owning Philippine condo | Estate tax is due here; heirs must appoint a Resident Administrator or executor to file. |
| Reciprocity on intangibles | If the decedent is from a country that does not tax Philippine intangibles, Philippine estate tax on his Philippine stocks/bank deposits is waived. |
| Bank withdrawals before eCAR | BIR clearance is needed; banks may release up to ₱20,000 without clearance to defray immediate expenses. |
| Life-insurance proceeds | Exempt if beneficiary designation is irrevocable. Make this clear in the policy to reduce future estate tax. |
| Vanishing deduction planning | If property was subject to donor’s tax within 5 years, keep all tax receipts—they yield a deduction of up to 100 % (year 1) tapering to 20 % (year 5). |
| Probate vs. Extrajudicial | Extrajudicial settlement is allowed only if (a) no will, (b) heirs are of legal age (or represented), and (c) they execute a public instrument and publish it for 3 weeks. |
11. Illustrative Computation (Resident Decedent, 2025 death)
| Particulars | Amount (₱) |
|---|---|
| House & lot (FMV) | 12,000,000 |
| Cash & Deposits | 1,500,000 |
| Listed shares | 2,000,000 |
| Gross Estate | 15,500,000 |
| Less: Standard deduction | (5,000,000) |
| Less: Family Home (max 10 M) | (10,000,000) |
| Net Estate | 500,000 |
| Estate Tax (6 %) | 30,000 |
Because the net estate is ≤ ₱5 million, filing would have been optional if the only asset were the family home. Here, shares make filing mandatory but the tax due is modest. Heirs could pay in cash or apply for amnesty (if qualified) up to 14 June 2025.
12. Post-Payment Transfers
- Real property: Present eCAR + original title to Registry of Deeds → new title in heirs’ names.
- Vehicles: eCAR + deed of assignment + original OR/CR to LTO → new CR.
- Stocks: eCAR + Secretary’s Certificate to corporation or broker → update stock ledger.
- Bank deposits: Bank needs eCAR and estate TIN to release balances.
13. Key Compliance Calendar
| Action | Timeframe |
|---|---|
| Secure TIN for estate | ASAP after death |
| File ETA Return & pay | Within 1 year |
| Apply for eCAR | After payment; processing 2-8 weeks |
| Avail Estate-Tax Amnesty | On/before 14 June 2025 |
| Final distribution & title transfer | Upon receipt of eCAR |
14. Practical Estate-Planning Moves
- Make beneficiary designations irrevocable (life insurance, retirement benefits).
- Consolidate debts and keep documentation—formal, notarized debt instruments create deductible claims.
- Consider lifetime transfers (but mind donor’s tax).
- Keep asset valuations and tax documents in one file for heirs.
- Write a will and discuss it with family to avoid disputes that delay tax filing.
15. Takeaways
The TRAIN-era estate tax regime is simpler yet still document-intensive.
- Flat 6 % on the net estate is generous if you maximize the ₱5 M standard deduction and ₱10 M family-home shelter.
- One-year clock starts on death; interest plus surcharge makes delay expensive.
- Estate-tax amnesty (cut-off 31 Dec 2021 deaths) remains a once-in-a-generation chance—deadline 14 June 2025.
- The eCAR is the golden ticket; no transfer occurs anywhere without it.
- Proper estate planning—clear records, notarized debts, irrevocable insurance designations—cuts tax and heartache for heirs.
Disclaimer: This article is for general information as of 19 June 2025 and is not a substitute for formal legal or tax advice. Always verify current BIR issuances or consult a Philippine tax professional for specific cases.