DEDUCTIONS

The Estate Tax Return (BIR Form 1801) shall be filed in triplicate by:

1. The executor, or administrator, or any of the legal heir/s of the decedent, whether
resident or non-resident of the Philippines, under any of the following situations:

a. In all cases of transfers subject to estate tax;

b. Regardless of the gross value of the estate, where the said estate consists of
registered or registrable property such as real property, motor vehicle, shares of stock or
other similar property for which a clearance from the BIR is required as a condition
precedent for the transfer of ownership thereof in the name of the transferee; or

2. If there is no executor or administrator appointed, qualified, and acting within the

Philippines, then any person in actual or constructive possession of any property of the
decedent.

Taxpayers who are filing BIR Form 1801 are excluded in the mandatory coverage from
using the eBlRForms (Section 2 of RR No. 9-2016)

● When and Where to File and Pay

The Estate Tax Return (BIR Form 1801) shall be filed within one (1) year from the
decedent's death. In meritorious cases, the Commissioner shall have the authority to
grant a reasonable extension not exceeding thirty (30) days for filing the return.

The return shall be filed with any Authorized Agent Bank (AAB) of the Revenue District
Office (RDO) having jurisdiction over the place of domicile of the decedent at the time
of his death. If the decedent has no legal residence in the Philippines, the return shall
be filed with the Office of the Commissioner (RDO No. 39, South Quezon City).

In case of a non-resident decedent with executor or administrator in the Philippines,

the return shall be filed with the AAB of the RDO where such executor/administrator is
registered or is domiciled, if not yet registered with the BIR.

In case the available cash of the estate is insufficient to pay the total estate tax due,
payment by installment shall be allowed within two (2) years from the statutory date for
its payment without civil penalty and interest upon approval by the concerned BIR
Official.

The due date on filing and payment of the return/tax shall depend on the applicable law
at the time of the decedent’s death.

● Extension to File and Pay

When the Commissioner of Internal Revenue finds that the payment on the due date of
the estate tax or of any part thereof would impose undue hardship upon the estate or
any of the heirs, he may extend the time for payment of such tax or any part thereof not
to exceed five (5) years, in case the estate is settled through the courts, or two (2)
years in case the estate is settled extra-judicially. In such case, the amount in respect
of which the extension is granted shall be paid on or before the date of the expiration of
the period of the extension, and the running of the Statute of Limitations for
assessment as provided in Section 203 of the National Internal Revenue Code shall be
suspended for the period of any such extension.

Where the taxes are assessed by reason of negligence, intentional disregard of rules
and regulations, or fraud on the part of the taxpayer, no extension will be granted by
the Commissioner.

If an extension is granted, the Commissioner of Internal Revenue or his duly authorized

representative may require the executor, or administrator, or beneficiary, as the case
may be, to furnish a bond in such amount, not exceeding double the amount of tax and
with such sureties as the Commissioner deems necessary, conditioned upon the
payment of the said tax in accordance in the terms of extension.

The application for extension of time to file the estate tax return must be filed with the
Revenue District Officer (RDO) where the estate is required to secure its Taxpayer
Identification Number (TIN) and file the tax returns of the estate. The application shall
be approved by the Commissioner or his duly authorized representative.

Frequently Asked Questions

1. What are included in gross estate?

A. For resident alien decedents/citizens:

● Real or immovable property, wherever located

● Tangible personal property, wherever located
● Intangible personal property, wherever located

B. For non-resident decedent/non-citizens:

● Real or immovable property located in the Philippines

● Tangible personal property located in the Philippines
● Intangible personal property - with a situs in the Philippines such as:
● Franchise which must be exercised in the Philippines
 ● Shares, obligations or bonds issued by corporations organized or constituted in
the Philippines
● Shares, obligations or bonds issued by a foreign corporation 85% of the business
of which is located in the Philippines
● Shares, obligations or bonds issued by a foreign corporation if such shares,
obligations or bonds have acquired a business situs in the Philippines (i.e. they
are used in the furtherance of its business in the Philippines)
● Shares, rights in any partnership, business or industry established in the
Philippines

2. What are excluded from gross estate?

● GSIS proceeds/ benefits

● Accruals from SSS
● Proceeds of life insurance where the beneficiary is irrevocably appointed
● Proceeds of life insurance under a group insurance taken by employer (not taken
out upon his life)
● War damage payments
● Transfer by way of bona fide sales
● Transfer of property to the National Government or to any of its political
subdivisions
● Separate property of the surviving spouse
● Merger of usufruct in the owner of the naked title
● Properties held in trust by the decedent
● Acquisition and/or transfer expressly declared as not taxable

3. What will be used as a basis in the valuation of property?

The properties comprising the gross estate shall be valued based on their fair market
value as of the time of decedent’s death.

If the property is a real property, the appraised value thereof as of the time of death shall
be, whichever is the higher of –

1. The fair market value as determined by the Commissioner, or

2. The fair market value as shown in the schedule of values fixed by the provincial
and city assessors.

4. What are the allowable deductions for Estate Tax Purposes?

(Please note that the allowable deductions will vary depending on the law applicable at
the time of the decedent’s death)
 ● FOR DATES OF DEATHS OCCURRING JANUARY 1, 2018 TO PRESENT (RA NO.
10963/TRAIN LAW)

A. For a citizen or resident alien:

1. Standard Deduction — An amount equivalent to Five million pesos

(₱5,000,000.00)
2. Claims against the estate -

Requisites for Deductibility of Claims against the Estate –

● The liability represents a personal obligation of the deceased existing at the time
of death;
● The liability was contracted in good faith and for adequate and full consideration
in money’s worth;
● The claim must be a debt or claim which is valid in law and enforceable in court;
and
● The indebtedness must not have been condoned by the creditor or the action to
collect from the decedent must not have prescribed.

3. Claims of the deceased against insolvent persons where the value of the decedent’s
interest therein is included in the value of the gross estate

4. Unpaid mortgages, taxes and casualty losses

5. Property previously taxed - An amount equal to the value specified below of any
property forming part of the gross estate situated in the Philippines of any person who
died within five (5) years prior to the death of the decedent, or transferred to the
decedent by gift within five (5) years prior to his death, where such property can be
identified as having been received by the decedent from the donor by gift, or from such
prior decedent by gift, bequest, devise or inheritance, or which can be identified as
having been acquired in exchange for property so received:

“One hundred percent (100%) of the value, if the prior decedent died within one (1) year
prior to the death of the decedent, or if the property was transferred to him by gift, within
the same period prior to his death;

“Eighty percent (80%) of the value, if the prior decedent died more than one (1) year but
not more than two (2) years prior to the death of the decedent, or if the property was
transferred to him by gift within the same period prior to his death;

“Sixty percent (60%) of the value, if the prior decedent died more than two (2) years but
not more than three (3) years prior to the death of the decedent, or if the property was
transferred to him by gift within the same period prior to his death;
“Forty percent (40%) of the value, if the prior decedent died more than three (3) years
but not more than four (4) years prior to the death of the decedent, or if the property
was transferred to him by gift within the same period prior to his death; and

“Twenty percent (20%) of the value, if the prior decedent died more than four (4) years
but not more than five (5) years prior to the death of the decedent, or if the property was
transferred to him by gift within the same period prior to his death.

“These deductions shall be allowed only where a donor’s tax, or estate tax imposed
under Title III of NIRC was finally determined and paid by or on behalf of such donor, or
the estate of such prior decedent, as the case may be, and only in the amount finally
determined as the value of such property in determining the value of the gift, or the
gross estate of such prior decedent, and only to the extent that the value of such
property is included in the decedent’s gross estate, and only if in determining the value
of the estate of the prior decedent, no deduction was allowable under this item in
respect of the property or properties given in exchange therefor. Where a deduction was
allowed of any mortgage or other lien in determining the donor’s tax, or the estate tax of
the prior decedent, which was paid in whole or in part prior to the decedent’s death, then
the deduction allowable this item shall be reduced by the amount so paid. Such
deduction allowable shall be reduced by an amount which bears the same ratio to the
amounts allowed as deductions under items (2), (3), (4), and (6) of this Subsection as
the amount otherwise deductible under this item bears to the value of the decedent’s
estate. Where the property referred to consists of two or more items, the aggregate
value of such items shall be used for the purpose of computing the deduction.

6. Transfers for Public Use

7. The Family Home - An amount equivalent to the current fair market value of the
decedent’s family home: Provided, however, that if the said current fair market value
exceeds Ten million pesos (₱10,000,000.00), the excess shall be subject to estate tax

If the family home is conjugal property and does not exceed (₱10,000,000.00), the
allowable deduction is one-half (1/2) of the amount only.

8. Amount Received by Heirs Under Republic Act No. 4917

Any amount received by the heirs from the decedent’s employer as a consequence of
the death of the decedent-employee in accordance with Republic Act No. 4917:
Provided, that such amount is included in the gross estate of the decedent.

9. Net share of the surviving spouse in the conjugal partnership or community property
B. For a non-resident alien:

1. Standard Deduction – An amount equivalent to Five hundred thousand pesos

(₱500,000)

2. Losses and indebtedness -

2.1. Claims against the estate

2.2. Claims of the deceased against insolvent persons where the value of the decedent’s
interest therein is included in the value of the gross estate
2.3. Unpaid mortgages, taxes and casualty losses

3. Property previously taxed

4. Transfers for Public Use

5. Net share of the surviving spouse in the conjugal partnership or community property

● FOR DEATHS OCCURRING JANUARY 1, 1998 TO DECEMBER 31, 2017 (RA NO.
8424/NIRC OF 1997)

A. For a citizen or resident alien:

1. Expenses, Losses, Indebtedness, and Taxes:

1. Actual funeral expenses (whether paid or unpaid) up to the time of interment, or

an amount equal to five percent (5%) of the gross estate, whichever is lower, but
in no case to exceed P200,000.
2. Judicial expenses of the testamentary or intestate proceedings.
3. Claims against the estate.
4. Claims of the deceased against insolvent persons where the value of the
decedent’s interest therein is included in the value of the gross estate; and,
5. Unpaid mortgages, taxes and casualty losses

2. Property previously taxed (Vanishing Deduction) (Section 86 (2) of the NIRC as

amended by RA No. 8424) - An amount equal to the value specified below of any
property forming a part of the gross estate situated in the Philippines of any person who
died within five (5) years prior to the death of the decedent, or transferred to the
decedent by gift within five (5) years prior to his death, where such property can be
identified as having been received by the decedent from the donor by gift, or from such
prior decedent by gift, bequest, devise or inheritance, or which can be identified as
having been acquired in exchange for property so received:

One hundred percent (100%) of the value, if the prior decedent died within one (1) year
prior to the death of the decedent, or if the property was transferred to him by gift within
the same period prior to his death;

Eighty percent (80%) of the value, if the prior decedent died more than one (1) year but
not more than two (2) years prior to the death of the decedent, or if the property was
transferred to him by gift within the same period prior to his death;

Sixty percent (60%) of the value, if the prior decedent died more than two (2) years but
not more than three (3) years prior to the death of the decedent, or if the property was
transferred to him by gift within the same period prior to his death;

Forty percent (40%) of the value, if the prior decedent died more than three (3) years but
not more than four (4) years prior to the death of the decedent, or if the property was
transferred to him by gift within the same period prior to his death; and

Twenty percent (20%) of the value, if the prior decedent died more than four (4) years
but not more than five (5) years prior to the death of the decedent, or if the property was
transferred to him by gift within the same period prior to his death;

These deductions shall be allowed only where a donor’s tax or estate tax imposed was
finally determined and paid by or on behalf of such donor, or the estate of such prior
decedent, as the case may be, and only in the amount finally determined as the value of
such property in determining the value of the gift, or the gross estate of such prior
decedent, and only to the extent that the value of such property is included in the
decedent’s gross estate, and only if in determining the value of the estate of the prior
decedent, no Property Previously Taxed or Vanishing Deduction was allowable in
respect of the property or properties given in exchange therefor. (Section 6 & 7 of RR
No. 2-2003)

3. Transfers for public use

4. The family home - fair market value but not to exceed P1,000,000.00

The family home refers to the dwelling house, including the land on which it is situated,
where the husband and wife, or a head of the family, and members of their family reside,
as certified to by the Barangay Captain of the locality. The family home is deemed
constituted on the house and lot from the time it is actually occupied as a family
residence and is considered as such for as long as any of its beneficiaries actually
resides therein. (Arts. 152 and 153, Family Code)
5. Standard deduction – A deduction in the amount of One Million Pesos
(P1,000,000.00) shall be allowed as an additional deduction without need of
substantiation.

6. Medical expenses – All medical expenses (cost of medicines, hospital bills, doctor’s
fees, etc.) incurred (whether paid or unpaid) within one (1) year before the death of the
decedent shall be allowed as a deduction provided that the same are duly substantiated
with official receipts. For services rendered by the decedent’s attending physicians,
invoices, statements of account duly certified by the hospital, and such other
documents in support thereof and provided, further, that the total amount thereof,
whether paid or unpaid, does not exceed Five Hundred Thousand Pesos (P500,000).

7. Amount received by heirs under RA No. 4917 - Any amount received by the heirs from
the decedent’s employer as a consequence of the death of the decedent-employee in
accordance with Republic Act No. 4917 is allowed as a deduction provided that the
amount of the separation benefit is included as part of the gross estate of the decedent.

8. Net share of the surviving spouse in the conjugal partnership or community property

B. For a non-resident alien:

1. Expenses, losses, indebtedness and taxes

2. Property previously taxed

3. Transfers for public use

4. Net share of the surviving spouse in the conjugal partnership or community property

No deduction shall be allowed in the case of a non-resident decedent not a citizen of the
Philippines, unless the executor, administrator, or anyone of the heirs, as the case may
be, includes in the return required to be filed in the Section 90 of the Code the value at
the time of the decedent’s death of that part of his gross estate not situated in the
Philippines.

5. What does the term "Funeral Expenses" include?

The term "FUNERAL EXPENSES" is not confined to its ordinary or usual meaning. They
include:

1. The mourning apparel of the surviving spouse and unmarried minor children of
the deceased bought and used on the occasion of the burial;
2. Expenses for the deceased’s wake, including food and drinks;
3. Publication charges for death notices;
 4. Telecommunication expenses incurred in informing relatives of the deceased;
5. Cost of burial plot, tombstones, monument or mausoleum but not their upkeep.
In case the deceased owns a family estate or several burial lots, only the value
corresponding to the plot where he is buried is deductible;
6. Interment and/or cremation fees and charges; and
7. All other expenses incurred for the performance of the rites and ceremonies
incident to interment.

Expenses incurred after the interment, such as for prayers, masses, entertainment, or
the like are not deductible. Any portion of the funeral and burial expenses borne or
defrayed by relatives and friends of the deceased are not deductible. Actual funeral
expenses shall mean those which are actually incurred in connection with the interment
or burial of the deceased. The expenses must be duly supported by official receipts or
invoices or other evidence to show that they were actually incurred. (Sec 6 (A)(1) of RR
2-2003)

6. What does the term "Judicial Expenses" include?

Expenses allowed as deduction under this category are those incurred in the
inventory-taking of assets comprising the gross estate, their administration, the
payment of debts of the estate, as well as the distribution of the estate among the heirs.
In short, these deductible items are expenses incurred during the settlement of the
estate but not beyond the last day prescribed by law, or the extension thereof, for the
filing of the estate tax return. Judicial expenses may include:

1. Fees of executor or administrator;

2. Attorney’s fees;
3. Court fees;
4. Accountant’s fees;
5. Appraiser’s fees;
6. Clerk hire;
7. Costs of preserving and distributing the estate;
8. Costs of storing or maintaining property of the estate; and
9. Brokerage fees for selling property of the estate.

Any unpaid amount for the aforementioned cost and expenses claimed under “Judicial
Expenses” should be supported by a sworn statement of account issued and signed by
the creditor. (Sec 6 (A)(2) of RR 2-2003)
DONOR’S TAXES

Tax Rates

(The rate applicable shall be based on the law prevailing at the time of donation)

● · Effective January 1, 2018 and onwards (Republic Act (RA) No. 10963/TRAIN)

Rate - The donor’s tax for each calendar year shall be six percent (6%) computed on the
basis of the total gifts in excess of Two Hundred Fifty Thousand Pesos (P250,000)
exempt gifts made during the calendar year.

Notes:

1. When the gifts are made during the same calendar year but on different dates, the
donor's tax shall be computed based on the total net gifts during the year.

2. The relationship between the donor and the donee(s) shall not be considered.
Republic Act No. 10963 (TRAIN Law) does not distinguish donations made to relatives,
or donations made to strangers.

· Who Shall File

The Donor’s Tax Return (BIR Form No. 1800) shall be filed in triplicate by any person,
natural or juridical, resident or non-resident, who transfers or causes to transfer property
by gift, whether in trust or otherwise, whether the gift is direct or indirect and whether
the property is real or personal, tangible or intangible.

Taxpayers who are filing BIR Form no. 1800 are excluded in the mandatory coverage
from using the eBlRForms (Section 2 of RR No. 9-2016).

1. What donations are tax exempt?

A. “In the Case of Gifts made by a Resident

● Gifts made to or for the use of the National Government or any entity created by
any of its agencies which is not conducted for profit, or to any political
subdivision of the said Government; and
● Gifts in favor of an educational and/or charitable, religious, cultural or social
welfare corporation, institution, accredited non-government organization, trust or
philanthropic organization or research institution or organization: Provided,
however, not more than 30% of said gifts will be used by such donee for
 administration purposes. For the purpose of this exemption, a ‘non-profit
educational and/or charitable corporation, institution, accredited non government
organization, trust or philanthropic organization and/or research institution or
organization’ is a school, college or university and/or charitable corporation,
accredited non government organization, trust or philanthropic organization and/
or research institution or organization, incorporated as a non stock entity, paying
no dividends, governed by trustees who receive no compensation, and devoting
all its income, whether students’ fees or gifts, donation, subsidies or other forms
of philanthropy, to the accomplishment and promotion of the purposes
enumerated in its Articles of Incorporation.” (Sec. 17 of RR No. 12-2018)

B. In the Case of Gifts Made by a Nonresident not a Citizen of the Philippines

● Gifts made to or for the use of the National Government or any entity created by
any of its agencies which is not conducted for profit, or to any political
subdivision of the said Government.
● Gifts in favor of an educational and/or charitable, religious, cultural or social
welfare corporation, institution, foundation, trust or philanthropic organization or
research institution or organization: Provided, however, that not more than thirty
percent (30%) of said gifts shall be used by such donee for administration
purposes. (Sec. 101 (B) of NIRC, as amended)

2. What are the bases in the valuation of property?

The properties comprising the gift/donation shall be valued based on their fair market
value as of the time of donation.

If the property is a real property, the fair market value thereof as of the time of donation
shall be, whichever is the higher of –

1. The fair market value as determined by the Commissioner, or

2. The fair market value as shown in the schedule of values fixed by the provincial and
city assessors.

In the case of shares of stocks, the fair market value shall depend on whether the
shares are listed or unlisted in the stock exchanges. Unlisted common shares are
valued based on their book value while unlisted preferred shares are valued at par value.
In determining the book value of common shares, appraisal surplus shall not be
considered as well as the value assigned to preferred shares, if there are any. On this
note, the valuation of unlisted shares shall be exempt from the provisions of RR No.
6-2013, as amended.
For shares which are listed in the stock exchanges, the fair market value shall be the
arithmetic mean between the highest and lowest quotation at a date nearest the date of
donation, if none is available on the date of donation.

The fair market value of units of participation in any association, recreation or

amusement club (such as golf, polo, or similar clubs), shall be the bid price nearest the
date of donation published in any newspaper or publication of general circulation.

To determine the value of the right to usufruct, use or habitation, as well as that of
annuity, there shall be taken into account the probable life of the beneficiary in
accordance with the latest basic standard mortality table, to be approved by the
Secretary of Finance, upon recommendation of the Insurance Commissioner. (Sec. 2, RR
No. 17-2018 and Sec. 5 of RR No. 12-2018)

3. For purposes of Donor’s Tax, what does the term “Net Gift” mean?

For purposes of the donor’s tax, “net gift” shall mean the net economic benefit from the
transfer that accrues to the donee. Accordingly, if a mortgaged property is transferred
as a gift, but imposing upon the donee the obligation to pay the mortgage liability, then
the net gift is measured by deducting from the fair market value of the property the
amount of mortgage assumed. (Sec. 12 of RR No. 12-2018)

4. Under R.A. No.10963 (TRAIN Law), is any contribution in cash or in kind to any
candidate or political party or coalition of parties for campaign purposes subject to the
payment of donor’s tax?

Sec. 28 (B) of RA No. 10963 (TRAIN Law) states that any contribution in cash or in kind
to any candidate, political party or coalition of parties for campaign purposes shall be
governed by the Election Code, as amended.”

5. For purposes of Donor’s Tax, is a legally adopted child considered stranger?

A legally adopted child is entitled to all the rights and obligations provided by law to
legitimate children, and therefore, donation to him shall not be considered as donation
made to stranger. (Sec. 10, RR No. 2-2003). However, with the passage of RA No. 10963
(TRAIN Law), effective on January 1, 2018, the relationship between the donor and
donee(s) is no longer considered in the computation of donor’s tax.

6. For purposes of Donor’s Tax, are donations between businesses considered

donations made between strangers?

Donation made between business organizations and those made between an individual
and a business organization shall be considered as donation made to a stranger. (sec.
10, RR No. 2-2003). However, with the passage of RA No. 10963 (TRAIN Law), effective
on January 1, 2018, the relationship between the donor and donee(s) is no longer
considered in in the computation of donor’s tax.

7. Are gratuitous donations to Homeowners’ Associations subject to Donor’s Tax?

Gifts, donations, and other contributions received by the Homeowners’ Associations

(Associations) are subject to the payment of donor’s tax pursuant to Section 98, and 99
of the NIRC, as amended by Sec. 28 of RA 10963 (TRAIN Law). Endowment or gifts
received by such associations are not exempt from donor’s tax considering that gifts to
Associations are not qualified for exemption under Section 101(A)(2) of the TRAIN Law.
(Section II, RMC No. 53-2013)

8. Is an onerous donation or donation in exchange for goods, services or use or lease

of properties to Homeowners’ Association subject to Donor’s Tax?

Pursuant to RMC No. 9-2013, associations are subject to the corresponding internal
revenue taxes imposed under the Tax Code of 1997 on their income of whatever kind
and character. In this regard, contributions to associations in exchange for goods,
services and use of properties constitute as other assessments/charges from activity in
exchange for the performance of a service, use of properties or delivery of an object. As
such, these fees are income on the part of the associations that are subject to income
tax under Section 27 of the Tax Code, as amended. (Section III, RMC No. 53-2013)

9. What is the proper treatment for transactions involving transfer of property other
than real property referred to in Section 24 (D) for less than adequate and full
consideration?

Where property, other than real property referred to in Section 24(D) of the NIRC, as
amended, is transferred for less than an adequate and full consideration in money or
money's worth, then the amount by which the fair market value of the property exceeded
the value of the consideration shall, for the purpose of the tax imposed by this Chapter
(Donor’s Tax), be deemed a gift, and shall be included in computing the amount of gifts
made during the calendar year: Provided, however, that a sale, exchange, or other
transfer of property made in the ordinary course of business (a transaction which is a
bona fide, at arm’s length, and free from any donative intent) will be considered as made
for an adequate and full consideration in money or money’s worth. (Sec. 16, RR No.
12-2018)

10. What entities are considered exempted from Donor’s Tax under special laws?

The list below consists of entities considered Donor’s Tax exempt under special laws
including, but not limited to the following:
· Rural Farm School (Sec. 14, R.A. No. 10618)
· People’s Television Network, Incorporated (Sec. 15, R.A. No. 10390)
· People’s Survival Fund (Sec. 13, R.A. No. 10174)
· Aurora Pacific Economic Zone and Freeport Authority (Sec. 7, R.A. No. 10083)
· Girl Scouts of the Philippines (Sec. 11, R.A. No. 10073)
· Philippine Red Cross (Sec. 5, R.A. No. 10072)
· Tubbataha Reefs Natural Park (Sec. 17, R.A. No. 10067)
· National Commission for Culture and the Arts (Sec. 35, R.A. No. 10066)
· Philippine Normal University (Sec. 7, R.A. No. 9647)
· University of the Philippines (Sec. 25, R.A. No. 9500)
· National Water Quality Management Fund (Sec. 9, R.A. No. 9275)
· Philippine Investors Commission (Sec. 9, R.A. No. 3850)
· Ramon Magsaysay Award Foundation (Sec. 2, R.A. 3676)
· Philippine-American Cultural Foundation (Sec. 4, P.D. 3062)
· International Rice Research Institute (Art. 5(2), PD 1620)
· Task Force on Human Settlements (Sec. 3(b)(8), E.O. 419)
· National Social Action Council (Sec. 4, P.D. 294)
· Aquaculture Department of the Southeast Asian Fisheries Development Center (Sec.
2, P.D. 292)
· Development Academy of the Philippines (Sec. 12, PD 205)
· Integrated Bar of the Philippines (Sec. 3, PD 181)

11. Is waiver/renunciation of an heir on his/her share from the inheritance subject to a

Donor’s Tax?
General renunciation of an heir on his/her share from the inheritance is not
subject to Donor's Tax. However, there are instances where in the settlement of the
estate of the decedent, instead of all the heirs receiving their respective shares in all the
properties of the decedent, the heirs will agree among themselves for a specific
property that each one of them will receive. In this scenario, there will definitely be an
heir who will receive a share lower or higher than the value of what should have been his
rightful share in all the properties of the decedent. In this case, there is actually a partial
renunciation of inheritance since the heir is waiving his share to only identified
properties but not to the entire properties of the decedent. Hence, donor's tax shall be
imposed on the value forgone as a result of such waiver/renunciation. (RMC No.
94-2021)
 VALUE ADDED TAX

Value-Added Tax (VAT) is a form of sales tax. It is a tax on consumption levied on the
sale, barter, exchange or lease of goods or properties and services in the Philippines
and on importation of goods into the Philippines. It is an indirect tax, which may be
shifted or passed on to the buyer, transferee or lessee of goods, properties or services.

Who are Required to File VAT Returns?

● Any person or entity who, in the course of his trade or business, sells, barters,
exchanges, leases goods or properties and renders services subject to VAT, if the
aggregate amount of actual gross sales or receipts exceed Three Million Pesos
(Php3,000,000.00)
● A person required to register as VAT taxpayer but failed to register
● Any person, whether or not made in the course of his trade or business, who
imports goods

Value-Added Tax Rates

● On sale of goods and properties - twelve percent (12%) of the gross selling price
or gross value in money of the goods or properties sold, bartered or exchanged
● On sale of services and use or lease of properties - twelve percent (12%) of gross
receipts derived from the sale or exchange of services, including the use or lease
of properties
● On importation of goods - twelve percent (12%) based on the total value used by
the Bureau of Customs in determining tariff and customs duties, plus customs
duties, excise taxes, if any, and other charges, such as tax to be paid by the
importer prior to the release of such goods from customs custody; provided, that
where the customs duties are determined on the basis of quantity or volume of
the goods, the VAT shall be based on the landed cost plus excise taxes, if any.
● On export sales and other zero-rated sales - 0%

Who is liable to register as VAT taxpayers?

Any person who, in the course of trade or business, sells, barters or exchanges goods or
properties or engages in the sale or exchange of services shall be liable to register if:

a. His gross sales or receipts for the past twelve (12) months, other than those that
are exempt under Section 109 (A) to (U), have exceeded Three Million Pesos
(P3,000,000.00): or
b. There are reasonable grounds to believe that his gross sales or receipts for the
next twelve (12) months, other than those that are exempt under Section 109 (A)
to (U), will exceed Three Million Pesos (P3,000,000.00).