A Less Taxing Chapter Through Estate Tax Amnesty

As death signifies loss and grief, estate taxes are unsurprisingly the last thing in the minds of bereaved families. Estate tax is imposed on the right to transmit property at death and on certain transfers considered by law as testamentary dispositions. An estate tax rate of six percent (6%) is based on the net estate and the corresponding estate tax return must be filed within one (1) year from the decedent’s death. The failure in the filing and payment gives rise to penalties and interest which further hinder the settlement of liabilities.

On 5 August 2023, Republic Act (RA) No. 11956 was enacted, extending the period of availment of the estate tax amnesty for another two (2) years or from 15 June 2023 until 14 June 2025. RA 119656 covers the estates of decedents who died on or before 31 May 2022 whose estate taxes have remained unpaid or have accrued as of 31 May 2022. This allows estates who failed to settle their affairs to have a clean slate by settling unpaid estate taxes without penalty and interests. Revenue Regulation No. 10-2023 was issued amending previous issuances to align with RA 11956.

Rep. Joey Salceda, the Chairperson of the Committee on Ways and Means, stated that the grant of estate tax amnesty is “to transfer estates more efficiently and more expeditiously so that their value can be unlocked for better economic use.” In Rep. Rosanna Vergara’s Sponsorship Speech, she mentioned that the extension “provides relief to families, generates revenue for the government, and promotes a more equitable distribution of wealth.”

To avail of the estate tax amnesty, the mandatory requirements are: (a) certified true copy (CTC) of the death certificate; (b) duly validated taxpayer identification number of the estate and heir/s; (c) CTC of marriage certificate; (d) original certificate of residency; (e) original deed of extra judicial settlement or court order on the distribution of property; (f) notarized promissory note in case of ‘claims against the estate’ arising from a contract of loan, if any, (g) proof of the claimed ‘property previously taxed’, (h) proof of the claimed ‘transfer for public use’, if applicable.

For real properties, the requirements are: (a) CTC of the transfer/original land or condominium certificates of title, (b) CTC of the tax declarations over real property and over the improvements issued 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, (c) certificate of no improvement, if applicable, and (d) the location plan/vicinity map if zonal value is not readily determinable.

For personal properties, the requirements are: (a) certificate of deposit/investment/indebtedness owned by the decedent either individually or with another, (b) certificate of registration of vehicle and/or other proof showing the value, (c) stock certificates with evidence of book value; (d) proof of valuation of shares of stock at the time of death, or (e) proof of valuation of other types of personal property.

If an authorized representative will process the application, a duly notarized original Special Power of Attorney must be submitted, and/or a sworn statement for heirs designated as executor/administrator. Documents executed abroad must be certified by the Philippine Consulate or apostilled.

In efforts to simplify the procedure, a significant inclusion is the electronic filing of the estate tax amnesty return and the payment of the amnesty tax. Currently, the filing and payment can be made electronically or manually, with any authorized agent bank, Revenue District Office, or authorized tax software provider. In addition, payment by installment is allowed within two (2) years from the statutory date for its payment without civil penalty and interest.

Thereafter, the application should be processed in the Revenue District Office and there shall be issued Electronic Certificate Authorizing Registration (eCAR) for each real property. A separate eCAR shall be issued for personal properties included in the estate.

Taxes are the lifeblood of the government, but the State is also understanding of the struggles of the taxpayers. For this reason, leniencies extended by the government do not aim to prolong the families’ agony but to encourage voluntary compliance. While the period to avail of the estate tax amnesty has been extended multiple times, we hope that taxpayers will not miss this chance to start a less taxing chapter and leave behind traces of past burdens.

This article is for general information and educational purposes only and not offered as legal advice or opinion.

Pia Justine S. Rodulfo is an associate of the Tax Department of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW).

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