ESTATE TAX RATE
OVER BUT NOT OVER THE TAX SHALL BE PLUS
- P200,000 Exempt -
P200,000 500,000 P0 5% of excess over P200K
500,000 2,000,000 15,000 8% of excess over P500K
2,000,000 5,000,000 135,000 11% of excess over P2M
5,000,000 10,000,000 465,000 15% of excess over P5M
10,000,000 - 1,215,000 20% of excess over P10M
IF THE DECEDENT DIED on or after January 1, 2018
6% of taxable net estate
GROSS ESTATE
Consists of all properties and interests in properties of the decedent at the time of his
death as well as properties transferred during lifetime (only in form), but in substance
was only transferred at the time death.
1. Components of the Gross Estate
PROPERTIES EXISTING AT THE TIME OF DEATH SUCH AS:
a. Real property and other tangible Personal Property
b. Decedent’s Interests, and Intangibles
Decedent’s Interest – refers to the extent of equity or ownership participation of
the decedent or any property physically existing and present in the gross estate,
whether or not in his possession, control, or dominion. It is also refers to the
value of any interest in property owned or possessed by the decedent at the time
of his death (interest having value or capable of being valued, transferred)
Intangible Properties considered Located in the Philippines:
Franchise which must be exercised in the Phils;
Shares, obligations, or bonds issued by an any corporation or sociedad
anonima organized or constituted in the Phils;
Shares, obligations, or bonds issued by an any foreign corporation, at
least 85% of the business of which is located in the Phils;
Shares, obligations, or bonds issued by an any foreign corporation, if such
shares, obligations, or bonds have acquired a business situs in the Phils;
Shares or rights in partnership, business or industry established in the
Phils.
c. Properties transferred gratuitously during lifetime, but in substance, transferred
upon death:
Transfer in contemplation of death
Transfer with the retention or reservation of certain right- allows the
transferor to continue enjoying, possessing or controlling the property
because only the naked title has been transferred.
Revocable transfer- decedent transfers the enjoyment of his property to
another, subject to his right to revoke the transfer at will, with, or without
notifying the transferee, any time before he dies.
Property passing under General Power of Appointment (GPA0
Transfers for insufficient consideration- sale of property below fair market
value (FMV)
Proceeds from life insurance- the following are included in the gross
estate:
a. Whether REVOCABLE or IRREVOCABLE, when the beneficiary is
the:
Estate of the deceased
His executor
Administrator
b. When the beneficiary is a third person, only if REVOCABLE.
2. Exemptions and Exclusions from Gross Estate
a. UNDER SECTIONS 85 and 86, NIRC
Capital or exclusive property of the surviving spouse
Properties outside the Philippines of a non-resident decedent
Intangible personal property in the Philippines of a non-resident alien
when the rule of Reciprocity applies.
b. UNDER SECTION 87, NIRC
1. The merger of the usufruct (right to use) in the owner of the naked title.
2. The transmission from the first heir, legatee, or done in favor of another
beneficiary in accordance with the will of the predecessor. This type of
transfer is most commonly known as “transfer under Special Power of
Appointment (SPA)”
o GPA- addition to gross estate
o SPA- exclusion from gross estate
3. The transmission or delivery of the inheritance or legacy of the fiduciary
heir or legatee to the fedeicomissary.
o This is the same with SPA above. The only difference is, in
fedeicomissary transfer, the relationship of the donor and done is
only one degree apart
4. All bequest, devices, legacies, or transfers to social welfare, cultural, and
charitable institutions, provided:
o No part of the net income of said institutions inure to the benefit of
any individual;
o Not more than 30% of such transfers shall be used for
administration purposes.
