On February 14, 2019, Philippine President Rodrigo R. Duterte signed Republic Act No. 11213, otherwise known as the Tax Amnesty Act (“the Act”).
Notably, the original coverage of the Act included a General Tax Amnesty (GTA) which would have provided for the settlement of all national internal revenue taxes, such as income tax, withholding tax, value-added tax, that have remained unpaid as of December 31, 2017. However, President Duterte exercised his veto power on this entire section. Thus, what has been passed as law is composed of two tax amnesty packages: The Estate Tax Amnesty and the Tax Amnesty on Delinquencies.
Estate Tax Amnesty
While the Tax Reform for Acceleration and Inclusion (TRAIN) Law lowered estate tax in the Philippines to a flat rate of 6% effective 1 January 2018, the Estate Tax Amnesty seeks to benefit estates of decedents, who died before the passage of TRAIN Law, by providing a means by which their heirs can settle any and all outstanding estate taxes and consequently, making the estate immune from any civil, criminal, and administrative case in relation to the failure to make timely payments of estate tax.
A taxpayer may avail of the Estate Tax Amnesty through any of the following:
- Paying 6% on:
- The decedent’s total net estate at the time of his/her death; or
- The net undeclared estate, for cases where an estate tax return had been previously filed.
- A minimum amnesty tax of Php5,000.00 (approximately USD95), if the estate’s allowable deductions exceed the value of the gross estate.
A taxpayer may avail of the Estate Tax Amnesty by filing a sworn Estate Tax Amnesty Return, a BIR-endorsed Acceptance Payment Form together with the required documents within two (2) years from the effectivity of the Act’s Implementing Rules and Regulations (IRR). The IRR for the Estate Tax Amnesty (Revenue Regulations 6-2019 dated May 29, 2019) became effective on June 15, 2019. Any declarations made by the taxpayer in the Estate Tax Amnesty Return will still be subject to evaluation by the Bureau of Internal Revenue (BIR).
In case of multiple estates or transfers, the Estate Tax Amnesty requires a separate settlement for each decedent or at every stage of the transfer of the property from one decedent to the next. Thus, where the property is registered in the name of a grandparent of the current possessor, the estate taxes of the grandparent and the relevant parent of the current possessor must be paid separately.