I. Introduction: Transfer taxes are only the beginning

In the Philippines, estate tax (for transfers upon death) and donor’s tax (for gratuitous transfers during life) are the headline “transfer taxes.” In actual administration, however, settling an estate or completing a donation often triggers other national and local taxes, fees, and charges—some of which are technically taxes, others of which function like taxes because they are mandatory prerequisites to registration, transfer, or enjoyment of property.

This article surveys the principal additional taxes that may be payable on top of estate tax or donor’s tax, explains when they arise, and highlights practical sequencing and common traps.

II. Conceptual map: why more taxes arise

A single transfer can involve multiple tax bases:

The transfer itself (estate/donor’s tax)
The property’s income or gains (income tax/capital gains)
The privilege of documents/transactions (documentary stamp tax)
Local government taxes on ownership/use (real property tax, local business taxes in some cases)
Withholding systems (expanded withholding, creditable withholding, final withholding depending on transaction form)
Registration-related exactions (transfer taxes/fees required by LGUs and registries)

Estate tax and donor’s tax are computed on net value of transfers, but registration systems still require other clearances (BIR, LGU, Registry of Deeds, banks, corporate secretaries).

III. Transfers of real property: the most common “extra taxes”

A. Local Transfer Tax (Provincial/City/Municipal Transfer Tax)

What it is: A local tax imposed by the local government unit (LGU) on transfer of real property ownership (including by inheritance or donation, depending on local ordinance implementation and required documentation for registration).

Why it matters: Even if estate tax/donor’s tax is paid, the Registry of Deeds often requires proof of local transfer tax payment (or exemption) as part of transfer documentation.

Typical triggers:

Transfer of title from decedent to heirs (estate settlement)
Donation of real property, if the LGU treats it as a taxable transfer under local ordinance practice

Notes:

Rates and administration are ordinance-based, within limits of the Local Government Code.
The tax base is typically linked to the property’s consideration/value (often tied to fair market values used locally).

B. Real Property Tax (RPT) and Special Levies

What it is: Annual local tax on real property (land, buildings, improvements), plus possible special education fund (SEF) component and special levies.

Why it matters in estates/donations:

Unpaid RPT can block issuance of clearances, tax declarations, and smooth title transfer.
Estates often discover delinquent taxes, penalties, or reassessments.
Donation doesn’t erase arrears; obligations follow the property.

Practical point: Many registries and local assessors require updated RPT payment and tax clearance before processing transfer-related documents.

C. Estate/Donation of real property that is “encumbered”: other local charges

If the property has:

tax delinquency sales history,
liens noted in tax declarations,
unpaid special assessments, the transferee/heirs may need to settle these to perfect transfer or avoid future enforcement.

IV. Transfers involving a “sale-like” structure: capital gains tax, income tax, and VAT issues

A key principle: estate/donor’s tax applies to gratuitous transfers, but many disputes arise when the transfer is recharacterized as a sale or exchange, or when there is a transfer for insufficient consideration.

A. Capital Gains Tax (CGT) on sale of real property (and shares)

What it is: A final tax imposed on certain capital asset sales (commonly real property classified as capital asset, and shares not traded on the stock exchange under the relevant regime).

When it becomes relevant “in addition” contexts:

Not usually on pure inheritance/donation, but relevant when:
- heirs sell inherited property before or after settlement;
- parties structure as “donation” but there is consideration, assumption of debt beyond thresholds, or quid pro quo that makes it partly a sale;
- donation is made but burdens/conditions effectively convert part of the transfer into a taxable sale component.

Planning pitfall: A transfer intended as donation can inadvertently trigger income tax/CGT treatment if it is not truly gratuitous.

B. Regular Income Tax on gains from sale of property

If the property is treated as an ordinary asset (e.g., inventory of a real estate dealer, property used in business depending on classification rules), sale of that property may be subject to regular income tax rather than CGT, and potentially to business taxes.

C. VAT or Percentage Tax on business-related transfers

If the transfer involves a VAT-registered business or a transfer of assets that is treated as a sale in the ordinary course, VAT (or percentage tax for non-VAT) issues can arise. While inheritance/donation itself is not a VAT “sale,” the line blurs where:

there is a transfer of business assets for consideration,
there are deemed sale rules,
the transaction is part of a continuing business disposition.

Estate context: Settling an estate that includes a going concern may trigger business tax exposures if assets are sold to distribute proceeds.

V. Documentary Stamp Tax (DST): the frequent “quiet extra tax”

DST is a tax on certain documents, instruments, loan agreements, conveyances, and securities transactions. In transfers connected to estates and donations, DST may arise through the paperwork and implementing instruments, even when the gratuitous transfer itself is taxed under estate/donor’s tax.

A. DST on deeds and conveyances (where applicable)

Instruments such as:

Deed of Absolute Sale (if heirs sell property)
Deed of Assignment (in certain contexts)
Real estate mortgages (if used to secure estate loans)
Transfers of shares through instruments

A pure extrajudicial settlement instrument is typically treated differently from a deed of sale; DST exposure often attaches when the estate/donation process uses sale-like or assignment documentation for consideration.

B. DST on loan documents used to pay estate tax

Estates often borrow funds to pay estate taxes and expenses. DST may apply to:

loan agreements,
promissory notes,
mortgages.

This is a common “additional tax” because it is triggered by financing, not by the transfer itself.

C. DST on transfer of shares or certificates (structure-dependent)

If heirs transfer or consolidate shares through instruments requiring stamping, DST may arise depending on the nature of the instrument and whether it is treated as a taxable document under DST rules.

VI. Withholding taxes: not a separate tax in theory, but a separate compliance burden in practice

Withholding is a collection mechanism. It often functions as an “extra payment” because it must be remitted before transactions are recognized.

A. Expanded withholding tax (EWT) on payments made by estates or heirs

Examples:

professional fees (lawyers, accountants, appraisers),
rentals paid by the estate,
contractor payments.

If the estate is treated as an entity required to withhold, failure to withhold can create:

deficiency taxes,
disallowance of expense deductions (where relevant),
penalties.

B. Creditable withholding tax / final withholding on sale transactions by heirs

When heirs sell inherited property:

buyer’s withholding obligations may apply in some cases depending on seller classification and asset type.
banks and brokers impose compliance requirements before releasing proceeds.

Why it counts as “in addition”: It is separate from estate tax and is triggered by subsequent monetization.

VII. Tax on income generated during estate administration: income tax on the estate

During settlement, the estate may earn income, such as:

rent from properties,
dividends,
interest,
business income if a business continues operations.

That income can trigger:

income tax filing obligations for the estate as a taxable entity (in relevant contexts),
withholding obligations,
business tax compliance if operations continue.

Key distinction: Estate tax is a one-time transfer tax on the net estate. Income tax is recurring on income earned after death (or during administration).

VIII. Local business taxes and regulatory fees: when the estate includes a business

If the decedent owned a business and operations continue (even temporarily):

local business tax may remain due,
renewal fees, permits, and regulatory compliance may continue,
penalties accrue if the business is not properly closed or transferred.

If the heirs form a new entity or continue the business under a new registration, that can entail new tax registrations and compliance.

IX. Stock and securities transfers: additional taxes and charges

A. Transfers through sale: capital gains tax / stock transaction tax

If heirs or donees sell shares:

the applicable tax depends on whether shares are listed/traded and on the tax regime applicable to the transaction type.
stock transaction tax applies in exchange-traded contexts; CGT regimes apply to certain non-listed share dispositions.

B. DST and corporate charges

Even when a transfer is gratuitous, companies often require:

transfer fees,
documentary requirements,
possibly DST-related compliance depending on the instrument.

C. Dividends during administration

Dividends received by the estate can be subject to final withholding taxes, depending on the nature of the dividend and the taxpayer category. This is separate from estate/donor’s tax.

X. Banking and financial asset transfers: final taxes, withholding, and compliance friction

Where the estate includes:

bank deposits,
time deposits,
bonds,
mutual funds,

issues commonly include:

final withholding taxes already withheld on interest (not “new,” but relevant to accounting);
requirements for release (eCAR/clearance, proof of settlement);
estate-level income reporting depending on timing and accrual.

Banks may require tax clearances to avoid liability.

XI. Excise and “special” taxes: niche but possible

These are less common but can arise if the estate/donation involves regulated goods:

alcohol, tobacco inventories,
petroleum products,
mineral products,
vehicles in certain regulatory contexts (registration fees and potential excise issues on disposition, depending on facts).

Usually these arise when a business holds such goods and disposes of them, not from the inheritance itself.

XII. Registration and transfer-related government fees (not taxes, but unavoidable)

Often paid alongside tax obligations:

Registry of Deeds fees
Notarial fees
Court fees (judicial settlement)
Publication costs (extrajudicial settlement publication requirement)
Assessor’s office fees for tax declarations
Transfer and issuance fees for stock certificates
HOA/condominium dues arrears and transfer charges

These are not “taxes” strictly speaking, but they materially affect the total cost of transfer.

XIII. Interaction with family property regimes: why it changes the tax picture

In marital property regimes, settlement often requires distinguishing:

conjugal/community property vs. exclusive property,
the surviving spouse’s share vs. the estate portion.

While this is primarily an estate tax computation issue, it also affects:

what assets are sold (and thus subject to CGT/income tax),
which income belongs to the estate during administration,
whether RPT and local charges fall on the estate or on the surviving spouse’s share.

XIV. Sequencing and compliance: a practical roadmap

A. In an estate settlement

Determine inventory and classification (real property, securities, business assets).
Identify arrears: RPT, permits, liabilities.
Pay estate tax (and secure the BIR clearance for transfer where required).
Pay local transfer taxes and secure local clearances.
Transfer titles/shares; pay registration fees.
If assets are sold to fund distribution:
- compute and pay CGT/income tax and DST (as applicable),
- comply with withholding obligations.

B. In a donation

Confirm gratuitous nature; identify any assumed obligations that could create sale-like components.
Pay donor’s tax; secure clearance for transfer.
Pay local transfer tax (if required by LGU practice) and update tax declarations.
If donation is followed by sale or involves business assets:
- evaluate CGT/income tax, DST, VAT/percentage tax exposures.

XV. Common pitfalls that increase “other taxes” exposure

Treating settlement instruments as sales
- Using deeds that look like sales or have consideration language can trigger CGT/DST issues.
Ignoring RPT arrears
- Delinquency penalties can dwarf transfer taxes over time.
Continuing business operations without tax housekeeping
- Creates income tax and local tax exposure.
Funding estate tax via loans without accounting for DST
- Adds unexpected costs.
Confusing donor’s tax with CGT
- A “donation with strings attached” can become partly a sale.
Failure to withhold on professional fees
- Creates penalties and compliance disputes.

XVI. Summary: what “other taxes” to watch, by asset type

Real property

Local transfer tax
Real property tax (plus penalties/SEF/special levies)
If sold: CGT or regular income tax, plus DST (and possibly withholding)

Shares/securities

If sold: stock taxes (depending on transaction type), CGT regimes where applicable
Possible DST on instruments
Income taxes on dividends/interest received during administration

Business assets / going concern

Income tax on operations
VAT/percentage tax where treated as sales/deemed sales
Local business taxes and permit fees
Withholding tax obligations on payments

Financing the settlement

DST on loan and mortgage instruments

XVII. Key takeaway

Estate tax and donor’s tax address the gratuitous transfer. The moment the transfer is implemented, registered, financed, or monetized, additional taxes—especially local transfer tax, real property tax, documentary stamp tax, income/capital gains taxes, business taxes, and withholding obligations—frequently arise and must be managed as part of a single integrated compliance plan.