by: Atty. Gregorio B. Austral, CPA
Estate Tax Amnesty Extension
There is an aphorism that taxes are imposed on a person from his cradle to grave. But even at the very moment of conception, taxation may already have its toll on the fetus as the food and other supplements for a healthy pregnancy are already subjected to enforced contributions to the government called taxes. When a person loses his breath and from the very moment death ushers in the right of his heirs to inherit his estate, the government’s taxing power also reaches his grave, making the properties of his estate subject to estate tax.
The government is fully aware that many estates remain undivided among heirs because of the burdensome estate tax. The burden is even doubled or tripled if the tax obligation is not paid on time. Thus, to make the properties of many estates available for productive use and to generate more government revenues, Congress passed Republic Act No. 11213, otherwise known as the “Tax Amnesty Act” which provides an estate tax amnesty program that will give reasonable tax relief to estates with outstanding estate tax liabilities.
The estate tax amnesty covers the estate of decedent/s who died on or before December 31, 2017, with or without assessments duly issued therefor, whose estate tax/es have remained unpaid or have accrued as of December 31, 2017. Excluded from the tax amnesty program are (1) delinquent estate tax liabilities which have become final and executory and those covered by Tax Amnesty on Delinquencies; and (2) properties involved in cases pending in appropriate courts such as those (a) falling under the jurisdiction of the Philippine Commission on Good Government; (b) involving unexplained or unlawfully acquired wealth; (c) involving violations of R.A. No. 9160, otherwise known as the Anti-Money Laundering Act; (d) involving tax evasion and other criminal offenses under the Tax Code; (e) and involving felonies of frauds, illegal exactions and transactions and malversation of public funds and property.
Instead of being slapped with the graduated rates ranging from 5% to 20% under Republic Act No. 8424, an estate tax amnesty rate of six percent (6%) is imposed on each decedent’s total net taxable estate at the time of death without penalties at every stage of transfer of property. There is, however, a minimum estate tax amnesty for the transfer of the estate of each decedent of P5,000.00.
The properties comprising the gross estate of the decedent shall be valued, in general, based on the fair market value as of the time of death of the decedent while deductions allowed by the estate tax law at the time of death of the decedent may be deducted from the gross estate. The estate tax amnesty may be availed by the executor or administrator, legal heirs, transferees or beneficiaries within two (2) years from the effectivity of the regulations by filing an Estate Tax Amnesty return (ETAR) with the Revenue District Office having jurisdiction over the last residence of the decedent. (Source: Revenue Regulations No. 6-2019).
Although there is still an estate tax obligation under this amnesty program, the rate is reduced to 6%. In addition, the dead are also forgiven and spared from paying the hefty compromise penalties, surcharges, and interests.
The estate tax amnesty program is now extended for two years from June 15, 2021 pursuant to Republic Act No. 11569.