I. Overview: What the Estate Tax Amnesty Covers (and Does Not Cover)

The Philippine Estate Tax Amnesty is a remedial program that allows estates of decedents who died on or before December 31, 2017 to settle unpaid estate taxes at a simplified rate, with immunity from related estate-tax penalties and criminal liabilities. It is governed principally by Republic Act No. 11213 (Tax Amnesty Act) and implementing regulations issued by the Bureau of Internal Revenue (BIR).

Key point: the amnesty covers only the national estate tax (including increments, surcharges, interest, and penalties connected to that estate tax). It does not automatically exempt or waive:

Local transfer tax imposed by provinces/cities/municipalities under the Local Government Code (LGC);
Registration fees payable to the Registry of Deeds (RD);
Notarial, publication, and documentary costs; and
Taxes on later transactions (e.g., capital gains tax if heirs sell).

So when you transfer inherited real property after availing of the amnesty, you still need to compute and pay the local transfer tax and other non-estate charges to register the property in the heirs’ names.

II. Distinguish Two “Transfer” Layers

A. Transfer by Succession (Inheritance)

This happens by operation of law at the moment of death. Tax involved: Estate tax (national). Under amnesty: settle at amnesty rate 6% of net estate, subject to minimum tax.

B. Transfer for Registration Purposes (to Heirs’ Names)

This is the administrative/legal transfer evidenced by an Extrajudicial Settlement (EJS), Partition, or Judicial Settlement, and filed with the RD and LGU.

Tax involved: Local transfer tax (LGC) + RD fees. Not covered by amnesty.

III. Step 1 — Compute the Estate Tax Under Amnesty (Because It Controls the eCAR)

Before any transfer tax can be meaningfully processed, you need the BIR Electronic Certificate Authorizing Registration (eCAR), which is issued after payment under the amnesty.

A. Compute the Net Estate

Identify gross estate at time of death (real property, personal property, shares, bank accounts, etc.).
Value each item as of date of death.
- Real property uses the higher of:
  - fair market value (FMV) per schedule of values/zonal value at time of death, or
  - FMV per local assessor at time of death.
Deduct allowable deductions based on the law in force at the date of death (this matters because death is pre-TRAIN). Typical deductions include:
- standard deduction (amount depends on law then),
- family home (subject to ceiling then),
- claims against the estate,
- transfers for public use,
- etc.

The regulations on amnesty generally retain the “law-at-death” rule for deductions but apply a single amnesty rate.

B. Apply the Amnesty Rate

Estate Tax Amnesty Due = 6% × Net Estate

Minimum amnesty tax: ₱5,000 total amnesty payment, even if 6% computes lower.

C. Pay and File

File the Estate Tax Amnesty Return (BIR Form 2118-EA).
Pay via authorized agent bank/RDO channels.
Obtain eCAR for each registrable property.

Why this matters for transfer tax: LGUs and the RD usually require the eCAR and often rely on the property values appearing there and/or in the settlement deed.

IV. Step 2 — Compute the Local Transfer Tax for Real Property

A. Legal Basis

Local transfer tax is imposed on the transfer of ownership of real property by sale, donation, barter, or any other mode, including succession. Authority lies in:

Provinces: LGC Sec. 135
Cities/Metro Manila municipalities: LGC Sec. 151 (higher ceiling)

B. Who Imposes and Collects

Province (for properties outside cities), or
City / Municipality in Metro Manila (for properties within their jurisdiction)

C. Tax Rate

Maximum rates allowed by the LGC:

Province: up to 0.50%
City / Metro Manila municipality: up to 0.75%

Actual rate depends on the ordinance of the LGU where the property is located.

D. Tax Base

Local transfer tax is computed on the higher of:

Consideration / stated value in the deed (EJS/partition), or
Fair Market Value (FMV) as determined by:
- BIR zonal value, or
- local assessor’s market value

LGUs commonly require both the BIR zonal value and assessor’s value and will use whichever is higher.

E. Formula

Local Transfer Tax = Applicable LGU Rate × Tax Base

V. Timing and Valuation Nuances Under Amnesty

A. What Date Is Used for FMV in Transfer Tax?

Although inheritance occurs at death, the local transfer tax is usually computed when you present the deed for registration, using:

FMV current at time of transfer/registration, or
FMV as stated/accepted in the settlement documents, whichever results in the higher base under the LGU’s rules.

In practice:

BIR values in the eCAR often reflect FMV as of death.
LGU values may be updated and may exceed death-time values.
LGU will usually apply its ordinance base as of filing.

B. Amnesty Does Not Freeze Local Tax Base

Even if the estate tax amnesty used older values (as of death), the LGU can still:

apply its current schedule of FMV, and
assess transfer tax on that higher amount.

VI. Worked Example (Estate Amnesty + Local Transfer Tax)

Facts:

Decedent died in 2010.
One parcel of land in a city.
FMV at death (higher of zonal/assessor): ₱3,000,000
Net estate after deductions: ₱2,500,000
City transfer tax rate (per ordinance): 0.75%
Current FMV per city assessor/zonal at filing: ₱4,000,000
Value stated in EJS: ₱3,000,000

A. Estate Tax Amnesty

Net estate = ₱2,500,000 Estate tax amnesty = 6% × ₱2,500,000 = 0.06 × 2,500,000 = ₱150,000

(Above minimum ₱5,000, so pay ₱150,000)

B. Local Transfer Tax

Tax base = higher of:

stated in deed: ₱3,000,000
current FMV: ₱4,000,000 So base = ₱4,000,000

Local transfer tax = 0.75% × ₱4,000,000 = 0.0075 × 4,000,000 = ₱30,000

Total (excluding RD fees, publication, notarial, etc.): ₱150,000 (estate amnesty) + ₱30,000 (local transfer tax) = ₱180,000

VII. Other Taxes Commonly Confused With “Transfer Tax”

A. Capital Gains Tax (CGT)

Not due on transfer from decedent to heirs because it is not a sale. Due later only if heirs sell the property.

B. Creditable/Withholding Taxes

Not applicable to pure inheritance transfers. May apply to later sales.

C. Documentary Stamp Tax (DST)

Generally not imposed on inheritance transfers as such because there is no sale, barter, or donation. However, DST will apply to:

deeds of sale by heirs later,
mortgages, leases, or other taxable instruments executed after settlement.

D. Real Property Tax (RPT) / Amilyar

Not part of estate tax amnesty. LGU may require updated RPT clearance before transfer tax payment and registration.

VIII. Procedural Checklist Tied to Transfer Tax Computation

Prepare settlement instrument
- Extrajudicial Settlement, Partition, or Court Order.
Publish EJS (once a week for 3 consecutive weeks).
File estate tax amnesty return + pay amnesty tax.
Secure eCAR from BIR.
Go to LGU Treasurer for transfer tax assessment:
- submit eCAR, deed, tax declarations, zonal/assessor values, RPT clearance.
Pay local transfer tax based on LGU computation.
Register at Registry of Deeds:
- pay RD fees, submit proof of taxes paid, secure new titles.

IX. Common Pitfalls and How to Avoid Them

Assuming amnesty waives local transfer tax
- It doesn’t. Budget for LGU tax separately.
Using only values “as of death” for LGU tax
- LGU may assess on current FMV; expect possible increase.
Failure to update RPT / tax declaration
- Leads to delays and reassessment.
Undervaluation in EJS
- LGU will override using higher FMV; may invite scrutiny.
Not allocating property among heirs clearly
- Partition ambiguities can trigger re-computation or require re-execution.

X. Practical Guidance for Clean Computation

Start with BIR amnesty computation: the property values you declare there set expectations.
Ask the LGU for its current transfer tax rate and FMV schedule early.
Compute two bases:
1. FMV at death (for amnesty),
2. FMV at filing/registration (for local transfer tax).
Expect the higher base to win at LGU level.
Keep copies of:
- eCAR,
- amnesty return,
- valuation documents,
- RPT clearances,
- official receipts.

XI. In Short

To compute the “transfer tax” on real properties covered by the Philippine Estate Tax Amnesty:

Compute and pay estate tax amnesty first
- 6% of net estate at death, minimum ₱5,000.
Then compute and pay local transfer tax
- rate up to 0.5% (province) or 0.75% (city/MM)
- base = higher of deed value or FMV (often current FMV).
Register the property after paying both.

That’s the full legal and computational framework: amnesty clears the national estate tax; local transfer tax remains a separate, later computation tied to registration of title.