Estate Tax Requirements in the Philippines A comprehensive legal guide updated as of 16 May 2025
1. Concept and Purpose
Estate tax is a transfer tax imposed on the privilege of transmitting a decedent’s properties to his or her heirs and beneficiaries at the time of death. It is assessed on the net estate—that is, the value of the gross estate less allowable deductions—rather than on each heir’s share. Revenues help finance public services and close the tax gap created when wealth shifts generations.
2. Statutory and Regulatory Framework
| Source | Key Provisions |
|---|---|
| National Internal Revenue Code (NIRC) of 1997, Title III, Chapter I | Foundational rules on what constitutes the gross estate, deductions, rates, filing deadlines, extensions, penalties, and special rules for non-residents. |
| Republic Act (RA) 10963 – “TRAIN” Law (1 Jan 2018) | Reduced the estate tax to a single 6 % flat rate, introduced a ₱5 million standard deduction and a ₱10 million family-home deduction, and removed the separate deduction for medical expenses. |
| RA 11213 – Estate Tax Amnesty Act (effective 14 Feb 2019) | Gave estates of decedents who died on or before 31 Dec 2017 a 6 % amnesty rate with minimal documentation. |
| RA 11569 (11 Jun 2021) and RA 11956 (5 Aug 2023) | Extended the amnesty’s availment period to 14 June 2025. |
| Implementing Revenue Regulations (RR), Revenue Memoranda (RMC/RMO) | e.g., RR 12-2018 (post-TRAIN rules), RR 8-2023 (latest amnesty guidelines); numerous RMCs on electronic payment channels, valuation rules, and documentary checklists. |
3. Who Is Liable to File and Pay?
Primary – the court-appointed executor or administrator.
Substitute – if none, any of the heirs in solidarity.
Where – the Bureau of Internal Revenue (BIR) Revenue District Office (RDO) where:
- the decedent was last domiciled (resident citizens and resident aliens); or
- the executor/administrator is registered; or
- RDO No. 39 – South QC for non-resident decedents.
4. Notice of Death (BIR Form 1949)
Required if the gross estate exceeds ₱5 million or the decedent left registered real property. Deadline – 60 days from the date of death.
5. The Gross Estate
| Decedent | Composition |
|---|---|
| Resident citizen / resident alien | Worldwide property—real, personal, tangible, intangible. |
| Non-resident alien | Only property situated in the Philippines (with reciprocity rule for intangible personal property). |
Valuation rules
- Real property – higher of: BIR-published zonal value or the provincial/city assessor’s fair market value as of death.
- Shares listed on PSE – closing price on date of death.
- Unlisted shares – book value per latest audited FS preceding death.
- Currency – rate published by Bangko Sentral ng Pilipinas on date of death.
6. Allowable Deductions (post-TRAIN)
- Standard deduction – ₱5,000,000 (no substantiation needed).
- Family home – lower of FMV or ₱10,000,000.
- Judicial expenses – costs of settlement/administration.
- Funeral expenses – actual, but not > 5 % of gross estate or ₱200,000, whichever is lower.
- Claims against the estate – debts existing at death, duly notarised and proven.
- Claims of the deceased against insolvent persons.
- Unpaid mortgages, taxes, and casualty losses.
- Vanishing deduction – for property previously taxed by donor’s/estate tax within 5 years.
- Share of surviving spouse – 50 % of the conjugal/community net properties.
Medical expenses deduction was repealed by the TRAIN Law.
7. Net Estate and Tax Rate
$$ \text{Net Estate}=\text{Gross Estate} - \text{Total Deductions} $$
Rate: 6 % of the net estate, regardless of amount or relationship.
8. Filing the Estate Tax Return (BIR Form 1801)
| Item | Rule |
|---|---|
| Deadline | Within 1 year from date of death. |
| Extensions | Commissioner may grant: * Filing: up to 30 days (meritorious) * Payment: up to 5 years (probate) / 2 years (extrajudicial) if payment imposes undue hardship. |
| Payment modes | Authorized Agent Banks, BIR ePAY (GCash/PayMaya/Landbank LinkBiz), OTC at RDO if no AAB, and installment (must pay interest). |
| Required attachments (typical) | Certified true copy of death certificate, TIN of heirs/executor, Schedule of assets & liabilities, “Certification of Barangay Captain” for family home, sworn statements of loans, zonal valuation print-outs, latest real-property tax declarations, extrajudicial settlement deed/court orders, proof of payments, CPA-audited FS if net estate > ₱5 million or with taxable income during settlement. |
9. Penalties for Non-Compliance
| Violation | Additions |
|---|---|
| Late filing or payment | 25 % surcharge on the tax due. |
| Filing with wilful neglect or false return | 50 % surcharge. |
| Deficiency interest | Legal interest per annum (currently 6 % under the TRAIN-aligned Tax Code), computed from original deadline to full payment. |
| Compromise penalties | As may be assessed by BIR. |
10. Certificate Authorizing Registration (CAR) & Tax Clearance
- CAR – issued after full payment (or bonds for installment) and is a prerequisite for transferring titles, stocks, or bank deposits.
- Tax clearance for bank withdrawals – banks may release up to ₱20,000 without clearance; anything beyond needs BIR-issued Electronic Letter of Authority and a CAR.
11. Estate Tax Amnesty (still open until 14 June 2025)
| Feature | Details |
|---|---|
| Coverage | Estates of decedents who died on or before 31 Dec 2017 with or without previously filed returns. |
| Rate | 6 % of the net taxable estate or minimum ₱5,000 if the net estate is nil/negative. |
| Return | BIR Form 2118-E (Estate Tax Amnesty Return) + Acceptance Payment Form. |
| Exclusions | Properties under the jurisdiction of the PCGG, unexplained wealth cases, money-laundering, tax-evasion cases with final judgment. |
| Effect | Immunity from civil, criminal, and administrative liabilities under the Tax Code for past deficiencies. |
| Latest rules | RR 8-2023 simplified documentation (no notice of death required, self-valuation allowed, automatic CAR issuance after payment). |
12. Special Rules for Non-Resident Aliens
Gross estate – only Philippine-situs property.
Deductions – same list but prorated:
$$ \text{Allowable Deduction}= \text{Total Deduction} \times \frac{\text{Philippine-situs Gross Estate}}{\text{Worldwide Gross Estate}} $$
Reciprocity for intangibles – shares, bank deposits, etc. are excluded if the decedent’s country does not impose transfer tax on Philippine citizens or allows a similar exemption.
13. Administrative Remedies
- Request for reinvestigation/reconsideration within 30 days from receipt of assessment.
- Appeal to the Commissioner; further appeal to the Court of Tax Appeals under Rule 4, CTA Rules.
- Refund/credit of erroneously paid estate tax – claim must be filed within 2 years from date of payment (Sec. 229, NIRC).
14. Recent Operational Updates
- Electronic Estate Tax Return (e-BIR Forms v7.9) – mandatory for covered taxpayers; auto-calculates penalties.
- Electronic One-Time Transaction (eONETT) system – online securing of CAR; pilots in Metro Manila and key RDOs.
- QR-Ph and InstaPay channels – facilitate real-time payments below ₱50,000 per transaction.
- RMC 143-2022 – clarified that the ₱10 million family-home deduction applies per decedent, not per heir.
15. Practical Estate-Planning Pointers
- Lifetime donations (subject to donor’s tax) can freeze values early and may yield overall savings.
- Life-insurance proceeds payable to a named beneficiary other than the estate are exempt from estate tax.
- Buy-sell agreements funded by insurance help ensure liquidity for closely held corporations.
- Proper titling (e.g., “conjugal” or “absolute separate property”) avoids disputes and simplifies the deductions for the spouse’s share.
- Maintain updated lists of assets and liabilities; secure valuations annually for high-value businesses or artworks.
16. Conclusion
The Philippine estate-tax system is markedly simpler since the TRAIN Law’s single 6 % rate, but compliance still demands meticulous documentation, punctual filing, and a working knowledge of BIR procedural nuances—especially where extensions, special deductions, and amnesty rules intersect. Early planning, timely notice of death, and close coordination with the BIR and professional advisers remain essential to preserve family wealth and transfer it smoothly to the next generation.