BIR issues revenue regulations draft for estate tax amnesty

April 24, 2019 | 10:13 pm [ bworldonline.com ]

BW FILE PHOTO

THE Bureau of Internal Revenue (BIR) released a revenue regulations (RR) draft covering the amnesty on estate tax Wednesday, outlining the process for offering taxpayers a one-time opportunity to settle estate tax obligations.

Under the draft RR which was presented at a consultation at the BIR headquarters in Quezon City, a 6% estate tax amnesty rate will apply to each decedent’s total net taxable estate at the time of death without penalty at every stage of transfer of property, duly conforming to the rules of succession under the Civil Code of the Philippines on the transfer of properties.

A Filipino citizen’s gross estate includes all property, real and personal, tangible and intangible. For resident aliens and non-resident aliens, the gross estate includes only real and personal property in the Philippines.

The gross estate, as defined, “consists of all properties and interests in properties of the decedent at the time of his death as well as properties he transferred during his lifetime (only in form), but in substance, ownership of the same, were only transferred at the time of his death.”

The net estate, meanwhile, is the “gross estate less all allowable deductions as provided in the National Internal Revenue Code (NIRC) of 1997, as amended, or the applicable estate tax law prevailing at the time of death of the decedent.”

The gross estate, in general, is to be valued on the basis of fair market value at the time of death of the decedent, BIR said, noting that if it is a real property, the fair market value is to be the higher of the zonal value as determined by the Commissioner and the fair market value as shown in the schedule of values fixed by the provincial and city assessors.

In case that the asset is listed and traded in the stock exchange, its fair market value shall be the value at the time of death or the closing rate nearest to the date of death, while for non-listed shares, the fair market value is to be the book value for common shares and par value for preferred shares as shown in the audited financial statement of the issuing corporation covering the period closest to the decedent’s date of death.

Foreign currency held in banks will be valued at the peso exchange rate at the date of death, it said.

According to the draft, in case the legal heirs, executor or administrator of the estate have newly discovered property undeclared in the previous filed return, he or she can file an estate tax amnesty return or an amended estate tax amnesty return, whichever is applicable, and pay the amnesty tax without penalty based on the net taxable value of the net undeclared estate within two years from the effectivity of the RR.

Net undeclared estate is “the difference between the total net estate valued at the time of death of the decedent and the net estate previously declared with the BIR, if any.” — Reicelene Joy N. Ignacio

Proposed RR on implementing the provisions of
Estate Tax Amnesty under Title II of the Tax Amnesty Act.

 Proposed RR/Annex A/Guidelines/Annex B/Annex C

_________________________________________