What is the Estate Tax Amnesty?
The Estate Tax Amnesty is a component of the Tax Amnesty Act or Republic Act No. 11213 which was signed into law last 14 February 2019. The Estate Tax Amnesty aims to resolve the common problem of most Filipinos who were not able to settle the estate taxes of their deceased predecessors and transfer the title of their inherited properties under their names.
The BIR started accepting application for the estate tax amnesty last June 17, 2019, following the release and publication of the Implementing Rules & Regulations (IRR) for the estate tax amnesty under BIR Revenue Regulations No. 6-2019. The estate tax amnesty program runs for two (2) years and will expire on June 15, 2021.
Taxpayers and property owners should avail of this once in a lifetime opportunity to settle the estate taxes of their property inheritance and transfer the titles of the properties under their name at a much lower cost without penalties, surcharge and interest.
One of the major problems in the real estate market today is a lot of inherited properties are still under the name of the deceased relatives. The heirs cannot enjoy the benefits of their inheritance because they cannot sell these properties. Why? Because they haven’t transferred the title under their names yet. One of the main reasons is the failure to settle the estate taxes.
What are the BENEFITS of the Estate Tax Amnesty?
1. Lower Estate Taxes
Prior to the estate tax amnesty and TRAIN Law, estate tax rates could go as high as twenty (20%) percent of the decedent’s net taxable estate. Under the estate tax amnesty, the estate tax rate is fixed at six (6%) percent of net taxable estate or PHP5,000 whichever is higher.
2 .Waiver of Tax Penalties, Interest & Surcharges
Under the tax amnesty, the tax penalties, interest and surcharges resulting from non-payment of estate tax are waived. In most cases, the amount of accumulated penalties and interest is more than the value of the estate tax. The waiver of penalties and interest will translate to a huge “tax savings” for taxpayers.
3. Immunities from Civil and Administrative Cases
Those who availed of the estate tax amnesty and have fully complied with the conditions will be immune from all civil, criminal and administrative cases under the 1997 Tax Code as amended.
What happens when the Estate Tax Amnesty EXPIRES?
When the estate tax amnesty expires, the old estate tax rates will prevail in the computation of estate tax. Likewise, there will be additional penalties and interest accruing from the time of death of decedent resulting in higher estate tax obligations which may cause financial burden for the heirs.
Questions:
1. What would be the basis in computing the estate tax with Amnesty?
The estate tax computation will be computed as:
Estate tax to be paid (during Amnesty) = Estimated value at the time of death of the
estate owner * 6%
A fixed estate amnesty rate at six percent (6%) for each decedent’s total net estate tax at the time of death without penalties at every stage of transfer.
The properties shall be based on the fair market value as of the time of death of the decedent.
2. What are the preliminary initial requirement should anyone be preparing?
Original and Certified true copy of Title of land or property
Updated Real Property Tax payment
Death Certificate and IDs of the estate owners
Birth Certificates, IDs (Government issued with photocopy) of all the heirs
Preliminary meeting of all the heirs on how they will decide to divide the properties if there is no Last will and testament of the dead estate owner
And of course money for processing of papers which includes: Judicial (lawyer fees), Transfer of Title/Registration fees and the approximate amount of actual Estate tax that needs to be settled.
