Relief to most of these problems has come, when Republic Act 11213 (RA 11213), also called the Tax Amnesty Act, came into effect on June 15, 2019. It provides a two-year window (until June 15, 2021), during which all delinquent Estate Taxes (maximum rate of 20%), Initial Penalties (25%) and Annual Interest on unpaid Tax (20%, which increases to 50%, if fraud is involved), are brought down to a very affordable SIX PERCENT (6%) of the net estate amount.
To understand this Tax Amnesty Law, let me introduce a few legal terms:
Decedent (also called the deceased) - the person who died.
Heir - the person who is entitled to receive a share of the decedent’s property, subject to the rules of inheritance in the jurisdiction of which the decedent was a citizen or where the decedent (deceased) died or owned property at the time of death.
Estate of the decedent- a deceased person's property, entitlements and obligations.
Will and Testament - instructions (normally written) for the disposition of one's property after death.
RA 11213 generally applies to the following:
The Estate Tax Amnesty shall cover the estate of the decedent(s) who dies on or before December 31, 2017. Decedents who died from January 1, 2018, are covered under a separate law.
The gross estate of the decedents who are Philippine 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, only, in the Philippines.
The Tax Amnesty window covers two (2) years, ending on June 15, 2021.
The Estate Tax will be SIX PERCENT (6%) only of the net estate, with all penalties and interests being waived.
The Estate Tax Amnesty shall not extend to:
a) Delinquent estate tax liabilities which have become final and executory and those covered by Tax Amnesty on Delinquencies; and
b) Properties involved in cases pending in appropriate (5) courts.
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. For real property, the fair market value shall be the higher value between the zonal value as determined by the Commissioner of Internal Revenue and the fair market value as shown in the schedule of values fixed by the provincial and city assessors. Moreover, the manner of computation of the net estate and the deductions allowed will also be based on the law applicable at the time of death,
Estates covered by Estate Tax Amnesty, which have fully complied with all the conditions set forth in the Regulations, including the payment of estate tax amnesty, shall be immune from the payment of all estate taxes for taxable year 2017 and all prior years, and from all appurtenant civil, criminal and administrative cases, and penalties. The availment of the Estate Tax Amnesty does not imply any admission of criminal, civil or administrative liability on the part of the availing estate. A separate estate tax amnesty shall be applied at every transfer of the property from every decedent to the heir.
There are two ways to take advantage of this tax amnesty program: using the legal processes of the judicial system (courts), OR extrajudicial settlement, anchored primarily on the UNANIMOUS AGREEMENT among the compulsory heirs. Given the short period left before the amnesty program ends, the extrajudicial settlement would be the preferred method to take.
Remember, as of September 1, 2019, you have only 21 ½ months left before the end of the Amnesty Program.
For more information or questions, please email email@example.com.
We will provide you a copy of Republic Act 11213, also called the Tax Amnesty Act; the Implementing Provisions of the Tax Amnesty Act; a Question and Answer exchange; and the biodata of the author, for your information. Please send your 1) Full Name, 2) Street Address, 3) Phone Numbers and 4) email address to firstname.lastname@example.org.
Horatio “Horex” Mauricio obtained his Law Degree from the University of the Philippines in 1981. He was admitted to the Philippine Bar in 1982.