Tax Articles

Deeper understanding of the Estate Tax Amnesty Act

By Atty. Ronel R. MoranoAuthor Here

June 15, 2019, is the start of the two-year period provided for by Republic Act 11213 (RA 11213) or the “Tax Amnesty Act” within which the taxpayers can avail themselves of the benefits of the Estate Tax Amnesty law. Revenue Regulations  6-2019 (RR 6-2019), which was issued to implement the law, aims “to provide the taxpayers a one-time opportunity to settle estate tax obligations through an estate tax amnesty program that will give reasonable tax relief to estates with outstanding estate tax liabilities.”

From the purpose of the said regulations, it can be gleaned that the Philippine government is encouraging all the concerned taxpayers to avail themselves of the benefits of the Tax Amnesty Act. There would be a substantial decrease in tax liabilities for transferring the properties of the decedent, as all the penalties, surcharges and interest will be foregone by the government in favor of those concerned taxpayers who will avail themselves of the Estate Tax Amnesty. 

Note that the Estate Tax Amnesty shall cover the estate of decedent/s who died on or before December 31, 2017, with or without assessments duly issued therefor, whose estate taxes have remained unpaid or have accrued as of December 31, 2017. Would this be unfair or prejudicial to those decedents who died from January 1, 2018, up to the present as their estate cannot avail of the amnesty? The answer is no. To recall, the Tax Reform for Acceleration and Inclusion (TRAIN) law became effective on January 1, 2018.

One of the amendments brought about by the TRAIN law is the tax rate used in computing the Estate Tax. Under the TRAIN law, a tax rate of 6 percent is imposed on the value of the net estate of the decedent. Likewise, the estate tax amnesty rate of 6 percent is imposed on decedent’s total net estate. In both laws, the tax base used is the net estate at the time of the death of the decedent and all other deductions are applicable. The minimum estate amnesty tax for the transfer of the estate of each decedent shall be P5,000. Thus, there is no grave prejudice to those decedents who died after December 31, 2017, even though their estates cannot avail of the Estate Tax Amnesty.

The gross estate of the decedents who are residents and citizens at the time of their death should include all properties, real and personal, tangible and intangible, wherever situated. The gross estate of the decedents who are nonresident aliens would include only real and personal properties situated in the Philippines.

How can an ordinary individual avail himself of the benefits of Estate Tax Amnesty? RR 6-2019 provided the step-by-step process on how to avail of the Estate Tax Amnesty.

First, the executor or administrator, legal heirs, transferees or beneficiaries should file an Estate Tax Amnesty Return (Etar or BIR Form 2118-EA) with the Revenue District Office having jurisdiction over the last residence of the decedent. In case of a nonresident decedent with no executor or administrator in the Philippines, the return shall be filed with RDO 39-South Quezon City.

Next, the duly accomplished and sworn Etar, and Acceptance Payment Form (APF or BIR Form 0621-EA), together with the complete documents as enumerated in the Etar, shall be presented to the concerned RDO for endorsement of the APF prior to the payment of the estate amnesty tax with the Authorized Agent Banks (AABs) or Revenue Collection Officers (RCOs).

After payment, the duly accomplished and sworn Etar and APF with proof of payment, together with the complete documentary requirements, shall be immediately submitted to the RDO in triplicate copies.

Under the second step, the concerned taxpayer must submit the complete documents as enumerated in the Etar with the RDO. What are the mandatory documentary evidence or requirements needed? Certain documentary 
requirements would vary depending on the type of properties the estate may have. In all cases, the following are the mandatory documentary evidence or requirements to be submitted with the RDO:

1. Certified true copy of the Death Certificate;

2. Taxpayer Identification Number of decedent and heir/s;

3. Estate Tax Amnesty Return;

4. Estate Tax Acceptance Payment Form, Revenue Official Receipt, if paid to RCO;

5. Affidavit of Self Adjudication or Deed of Extrajudicial Settlement  of the Estate of the decedent; or Court decision/judgement if the estate has been settled judicially, or if there is a last will and testament;

6. Certification of the Barangay Captain for the last residence of the decedent and claimed Family Home, if any;

7. For “Claims Against the Estate” arising from Contract of Loan, Notarized Promissory Note, if applicable;

8. Proof of the claimed “Property Previously Taxed,” if any;

9. Proof of the claimed “Transfer for Public Use,” if any; and

10. At least one valid government ID of the executor/administrator of the estate, or if there is no executor or administrator appointed, the heirs, transferees, beneficiaries or authorized representative.

 For Real Property/ies, if any:

11. Certified true copy/ies of the Transfer/Original/Condominium Certificate/s of Title of real 
    property/ies;

12. Certified true copy of the Tax Declaration of real property/ies, including the improvements at the time of death or the succeeding available tax declaration issued nearest to the time of death of the decedent, if none is available at the time of death; and

13. Where declared property/ies has/have no improvement, Certificate of No Improvement issued by the Assessor’s Office at the time of death of the decedent.

 For Personal Property/ies, if any:

14. Certificate of Deposit/Investment/Indebtedness owned by the decedent alone, or decedent and the surviving spouse, or decedent jointly with others;

15. Certificate of Registration of vehicle/s and other proofs showing the correct value of the same;

16. Certificate of stocks;

17. Proof of valuation of shares of stock at the time of death; and

18. Proof of valuation of other types of personal property.

For the documentary requirements for the real and personal properties, the original copies of each requirement must be presented and two photocopies must be submitted with the concerned RDO.

After the submission of the complete documentary requirements with the duly validated APR, the Certificate of Availment of the Estate Tax Amnesty shall be issued by the concerned RDO within 15 calendar days from the receipt of the application for estate tax amnesty. The wordings of the regulations require that it is mandatory for the concerned RDO to issue the Certificate of Availment within 15 days from receipt of the complete documentary requirements from the taxpayer. Otherwise, the concerned personnel who have been found remiss in their responsibilities shall be meted with the applicable administrative sanctions.

Lastly, one electronic Certificate Authorizing Registration shall be issued per real property including the improvements, if any, covered by Original Certificate of Title/Transfer Certificate of Title/Condominium Certificate of Title or Tax Declaration for untitled properties. For personal properties included in the estate, a separate eCAR shall be issued.

Once you complied with all the requirements provided for by the regulations, you shall be considered immune from the payment of all estate taxes, as well as any increments and additions thereto, arising from the failure to pay any and all estate taxes for taxable year 2017 and prior years, and from all appurtenant civil, criminal and administrative cases, and penalties under the Tax Code.

While it is true that it is taxing and demanding to comply with all the documentary requirements, all your efforts would be worthwhile as you can already enjoy those properties under your name and with peace of mind.