Estate Tax and Amnesty
The Estate Tax is a tax that is levied by the Philippine government against the estate (assets) of a person who has died. This tax must be paid to the BIR (Bureau of Internal Revenue) before the assets of the decedent is transferred to his heirs or beneficiaries.
Traditionally, the estate tax in the Philippines was levied at a maximum rate of 20% on the net estate of the decedent. Failure to file the estate tax return and pay the taxes due within the allotted time after the date of death resulted in penalties and interests being imposed. The penalty for late filing and payment of the estate tax is a 25% surcharge (up to 50%) and a yearly interest of 20%.
In many instances, the heirs of the decedent are either not aware of the requirements of paying the estate tax (in order to legally inherit the property(ies) of the decedent), or they are simply not able to shoulder the cost of the tax. So, they just continue to live on (or use) the property without ever dealing with the estate taxes that are due.
Over time, because of the penalties and interest associated with failing to pay the estate taxes owed, the amounts due become quite substantial. Unfortunately, payment of the estate tax (including any imposed penalties and interests) are necessary in order for the Register of Deeds (or Financial Institution in the case of some cash accounts) to legally transfer the assets to the heirs and beneficiaries. As such, many pieces of real property in the Philippines remain under the names of people who died decades ago; and the heirs are unable to legally claim what is rightfully theirs.
Fortunately, under the newly approved Republic Act (RA) No. 11213, also known as the Tax Amnesty Act of 2019, an amnesty program was created for heirs and beneficiaries who fall under the above-mentioned dilemma. Those who take advantage of the program are given IMMUNITY from the payment of estate taxes, as well as civil, criminal, administrative cases and penalties. This can be accomplished by simply settling all estate tax obligations within two years from the amnesty’s effective date. Unlike previous estate tax provisions, the amnesty program provides for a flat 6 percent (6%) tax on the decedent’s total net estate at the time of death, with a minimum tax amnesty amount of P5,000 per decedent, and all outstanding penalties and interest are forgiven at each stage of transfer of property.
Unfortunately, this Estate Tax Amnesty program is only available for a very short period of time. As you can see from the “Count Down” in our website, the Estate Tax Amnesty ends at the strike of midnight on June 15, 2023.
So how can you take advantage of this once in a lifetime opportunity offered by the Estate Tax Amnesty program? Fil-Am lawyers can help. Our team of licensed and experienced attorneys, from both the United States and the Philippines, can guide you through the intricate maze of the Philippine Estate Tax and Inheritance laws and help you receive, and protect, what is rightfully yours.