ESTATE TAX CREDIT,

DISTRIBUTABLE ESTATE,
AND ESTATE TAX RETURNS
 ESTATE TAX CREDIT, DISTRIBUTABLE ESTATE,
AND ESTATE TAX RETURNS

Definition:
Estate tax credit – the taxpayer’s right to deduct from the
estate tax due the amount of tax it has paid to a foreign
country.
Rules:
1. The amount should not exceed the proportion of the tax
due in the Philippines which the decedent’s net estate
situated within such country bears to his entire net estate.
2. NRA decedents are not entitled to estate tax credit.
 ESTATE TAX CREDIT, DISTRIBUTABLE ESTATE,
AND ESTATE TAX RETURNS

Statutory formula for computation of estate tax credit:

Limit A or Limit 1 (for only one foreign country):

Net estate (foreign country) / Total net estate (from all
sources) x Philippine estate tax due = Amount of
limit

Compare with actual tax paid in foreign country,

whichever is lower
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Limit B or Limit 2 (for more than one foreign

country:

Step 1: Compute Limit A for each foreign country

Step 2: Compute for Limit B or limit 2
Net estate from all foreign countries / Net estate
from all sources x Philippine estate tax due = limit
Compare with actual taxes paid in all foreign
countries, whichever is lower
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ESTATE, AND ESTATE TAX RETURNS

Step 3: Compute allowed tax credit by choosing

the lower amount between limit A and limit B
from steps 1 and 2, respectively
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ESTATE, AND ESTATE TAX RETURNS

Distributable estate:
 The amount arrived at from gross estate consisting
of all properties in the possession and control of
the decedent at the time of death and actual
expenses, charges, and payments from the gross
estate.
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ESTATE, AND ESTATE TAX RETURNS
Comparison between net taxable estate and net distributable estate:
Taxable Distributable
GROSS ESTATE
Real or immovable property I I
Tangible personal property I I
Intangible personal property I I
Transfers in contemplation of death I I
Revocable transfers I I
Transfers under the general power of appointment I I
Proceeds of life insurance I I
Exclusions such as SSS,GSIS, etc. E I
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ESTATE, AND ESTATE TAX RETURNS
Taxable Distributable
ALLOWABLE DEDUCTIONS
Funeral expenses X Actual
Judicial X Actual
Unpaid taxes Actual Actual
Claims against the estate Actual Actual
Claims against insolvent persons Actual Actual
Losses Actual Actual
Transfer for public purpose Actual Actual
Vanishing deduction As computed X
Standard deduction P 5M X
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Taxable Distributable
ALLOWABLE DEDUCTIONS (continued)
Family home Up to P 10M X
Medical expenses X Actual
Amount received under RA Actual X
4917
Share of surviving spouse ½ of net conjugal ½ of net conjugal
NET TAXABLE ESTATE xxx
ESTATE TAX DUE Actual
NET DISTRIBUTABLE ESTATE xxx
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ESTATE, AND ESTATE TAX RETURNS

Estate tax returns (RR 12-2018):

Who shall file and pay:

1. By the executor/administrator; or
2. Any of the heirs
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AND ESTATE TAX RETURNS

Situations under which estate tax returns under oath are

filed:
1. In cases of transfer subject to estate tax; and
2. Where regardless of the gross value, the estate consists of
registered or registrable property such as real property,
motor vehicle, shares of stocks, or other similar property
for which a Certificate Authorizing Registration (CAR)
from the BIR is required as a condition precedent for the
transfer of ownership thereof in the name of the transferee,
the executor, or the administrator, or any of the legal heirs,
as the case may be.
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ESTATE TAX RETURNS

Other requirements:
When gross value exceeds five million pesos, estate
tax return shall be supported with a statement duly
certified by a CPA containing:
1. Itemized assets of the decedent with their
corresponding gross value at the time of death, or
in the case of non-resident, not a citizen of the
Philippines, of that part of his gross estate situated
in the Philippines.
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2. Itemized deductions allowed from the gross

estate under Sec. 86 of the Tax Code as
amended;
3. The amount of tax due, whether paid or still due
and outstanding.
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ESTATE, AND ESTATE TAX RETURNS

Time of filing:

 One year from the date of death

 The court approving the project of partition shall
furnish the Commissioner with certified copy
thereof and its order within thirty (30) days after
promulgation of such order.
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ESTATE, AND ESTATE TAX RETURNS
Extension of time to file:
 The Commissioner or any Revenue Officer authorized by
him shall have the authority to grant, in meritorious cases, a
reasonable extension not exceeding thirty (30) days for
filing the return.
 The application for the extension of time to file the estate
tax return must be filed with the RDO where the estate is
required to secure its TIN and file the tax returns of the
estate, which RDO, likewise has the jurisdiction over the
estate tax return required to be filed by any party as a result
of the distribution of the assets and liabilities of the
decedent.
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ESTATE, AND ESTATE TAX RETURNS

Time for payment:

 Generally, at the time the estate tax return is filed
by the executor, administrator, or the heir(s).
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ESTATE, AND ESTATE TAX RETURNS

Extension of time to pay estate tax:

The Commissioner may at the time for payment of
such tax or any part thereof:
 Not to exceed five (5) years if the estate is settled
through the courts; or
 Not to exceed two (2) years if the estate is settled
extrajudicially.
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ESTATE, AND ESTATE TAX RETURNS

No extension shall be granted if the request is by

reason of:
 negligence;
 intentional disregard of rules and regulations; or
 fraud

on the part of the taxpayer.

 ESTATE TAX CREDIT, DISTRIBUTABLE ESTATE,
AND ESTATE TAX RETURNS

If an extension is granted, the Commissioner 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 the tax and
with such sureties as the Commissioner deems
necessary, conditioned upon the payment of the
said tax in accordance with the terms of the
extension.
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ESTATE, AND ESTATE TAX RETURNS

Payment of estate tax by installment and partial disposition

of estate:
 In cases of insufficiency of cash for immediate payment
of the total estate tax due, the estate may be allowed the
following options:
1. Cash installment
 Shall be made two (2) years from the date of the
filing of the estate tax return;
 The estate tax return shall be filed one (1) year from
the date of the decedent’s death;
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 In case of lapse of two (2) years without the
payment of the entire tax due, the remaining
balance thereof shall be due and demandable
subject to applicable penalties and interest
reckoned from the prescribed deadline for filing
the return and payment of estate tax; and
 No civil penalties or interest may be imposed on
the estate permitted to pay the estate tax due by
installment.
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ESTATE, AND ESTATE TAX RETURNS

2. Partial disposition of estate and application of

its proceeds to the estate tax due
 The disposition for purposes of this option shall
refer to the conveyance of property, whether real,
personal, or intangible property, with the
equivalent cash consideration;
 The estate tax return shall be filed within one (1)
year from the date of the decedent’s death;
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 The written request, together with a notarized

undertaking that the proceeds thereof shall be
exclusively used for the payment of the total
estate tax due, for the partial disposition of estate
shall be approved by the BIR;
 The computed estate tax due shall be allocated in
proportion to the value of each property;
 The estate shall pay to the BIR the proportionate
estate tax due of the property intended to be
disposed of;
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ESTATE, AND ESTATE TAX RETURNS

 An eCAR shall be issued upon presentation of the proof

of payment of the proportionate estate tax due of the
property intended to be disposed; and
 In case of failure to pay the entire tax due out from the
proceeds of the said disposition, the estate tax due shall
be immediately due and demandable subject to
applicable penalties and interest reckoned from the
prescribed deadline for filing the return and payment of
estate tax, without prejudice of withholding the
issuance of eCARs on the remaining properties until the
remaining balance and penalties and interests are paid.
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ESTATE, AND ESTATE TAX RETURNS

Request for extension of time, installment payment,

and partial disposition of estate:

 Shall be filed with the RDO where the estate is

required to secure its TIN and file the estate tax
return.
 Needs to be approved by the Commissioner or his
duly authorized representative.
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ESTATE, AND ESTATE TAX RETURNS

Place of filing and payment of estate tax:

A. Resident decedent – the administrator or executor

shall register the estate of the decedent and secure
a new TIN from the RDO where the decedent was
domiciled at the time of his death and shall file
and pay of the corresponding estate tax with RDO
having jurisdiction on the place where the
decedent was domiciled at the time of his death.
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ESTATE, AND ESTATE TAX RETURNS

B. Non-resident decedent
 With administrator or executor in the
Philippines – the administrator or executor shall
register the estate of the decedent and secure a
new TIN from the RDO where the administrator
or executor is registered or from RDO having
jurisdiction over the executor or administrator, if
not registered.
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ESTATE, AND ESTATE TAX RETURNS

 Without executor or administrator – filed with

and the TIN for the estate shall be secured
from the Office of the Commissioner through
RDO No. 039 – South Quezon City.
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Liability for payment of estate tax:

 Executor/Administrator – primary obligation

to pay estate tax.
 Heir or beneficiary – subsidiary liability to
pay that portion of the estate which his
distributive share bears to the value of the
total net estate.
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ESTATE, AND ESTATE TAX RETURNS

Civil penalties and interest:

 Any amount paid after the statutory due date but within
the extension period shall be subject to interest but not
to surcharge.
 Penalty of 25% if there is no false or fraudulent intent
on the taxpayer.
 Penalty of 50% if there is false, malice, or fraudulent
intent on the taxpayer.
 Interest of 12% on the unpaid amount of tax from the
date computed until fully paid.
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Payment of tax antecedent to the transfer of shares, bonds, or

rights:

 No transfer to new owner by way of gift inter vivos or mortis

causa unless a certification from the Commissioner that the
applicable tax had been paid.
 A bank may allow withdrawal of deposit subject to final
withholding tax of 6%.
 In case available cash 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.