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    Transfer taxes are imposed on the privilege of transferring property without consideration and are based on the act of passing ownership rather than the property itself. The laws governing transfer taxes depend on whether the transfer occurs during one's lifetime as a donation inter vivos, or upon death as a donation mortis causa. Donation inter vivos transfers are subject to donor's tax under the laws at the time of transfer, while donation mortis causa transfers fall under estate tax laws at the time of death. Estate tax specifically is a tax on the privilege of transmitting property after death, assessed on the entire net estate regardless of heirs in order to tax the ability to transfer wealth and heirs' receipt of inheritance.

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    TAX NOTES

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    Transfer taxes are imposed on the privilege of transferring property without consideration and are based on the act of passing ownership rather than the property itself. The laws governing transfer taxes depend on whether the transfer occurs during one's lifetime as a donation inter vivos, or upon death as a donation mortis causa. Donation inter vivos transfers are subject to donor's tax under the laws at the time of transfer, while donation mortis causa transfers fall under estate tax laws at the time of death. Estate tax specifically is a tax on the privilege of transmitting property after death, assessed on the entire net estate regardless of heirs in order to tax the ability to transfer wealth and heirs' receipt of inheritance.

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    Tax Notes

    Uploaded by

    DJab
    Transfer taxes are imposed on the privilege of transferring property without consideration and are based on the act of passing ownership rather than the property itself. The laws governing transfer taxes depend on whether the transfer occurs during one's lifetime as a donation inter vivos, or upon death as a donation mortis causa. Donation inter vivos transfers are subject to donor's tax under the laws at the time of transfer, while donation mortis causa transfers fall under estate tax laws at the time of death. Estate tax specifically is a tax on the privilege of transmitting property after death, assessed on the entire net estate regardless of heirs in order to tax the ability to transfer wealth and heirs' receipt of inheritance.

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    I.

    TRANSFER TAXES
    1. What are transfer taxes?
    Transfer taxes are those taxes imposed upon the privilege granted by the state to the
    taxpayer so that he may transfer properties, real or personal, without consideration. Transfer taxes
    are excise or privilege taxes that are imposed on the act of passing ownership of property and not
    taxes on the property transferred.
    2. Distinctions between donation inter vivos and donation mortis causa
    Transfer taxes are governed by the laws existing at the time the transfer takes place. In
    particular –

     Donations inter vivos


    -are governed by the law existing at the time of the effectivity of the donation
    since the transfer takes place at that time
     Donations mortis causa
    -are governed by the law at the time of death because it is at that time that the
    property is transferred.

    Donation inter vivos are not subject to estate taxes because the transfer of the
    property takes effect during the lifetime of the donor. The transfer is therefore subject
    to donor’s tax. On the other hand, donation mortis cause are subject to estate taxes
    since the transfer of the properties takes effect after the death of the decedent.
    However, donation inter vivos, actually constituting taxable lifetime lik transfer in
    contemplation of death or revocable transfers may be taxed for estate tax purposes,
    the theory being that the transferor’s control thereon extends up to the time of his
    death.

    A. Estate Tax
    An estate tax is a tax imposed on the privilege of the decedent to transmit property at
    death and is based on the entire net estate, regardless of the number of heirs and relations to the
    decedent. It is a tax levied, assessed, collected and paid upon the privilege of gratuitously
    transferring the net estate of a decedent to his heirs.
    The fact that the decedent had property at the time of his death to transmit to his heirs
    proves that he has the ability to pay taxes. Also, on the part of the heirs, their receipt of their share
    in the inheritance is considered an "unearned wealth" which justifies the payment of the tax. This
    is the same theory used to support the levy and collection of inheritance tax (different from estate
    tax) in other jurisdictions (which does not exist under Philippine tax laws).

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