QuestionsQuestions (KRI REVENUE REGULATION NO. 17-93)
It governs the taxation of (1) the transmission of a decedent’s estate and (2) donations made by persons (natural or juridical), whether citizens or aliens, residents or non-residents.
Estate taxation is governed by the statute in force at the time of the decedent’s death; the state’s right to tax vests instantly upon death.
RA 7499 was published in the Official Gazette in July 13, 1992 (Vol. 88, No. 24). It took effect after 15 days from publication, i.e., on July 28, 1992, pursuant to Art. 2 of the Civil Code and related Supreme Court rulings.
Within six (6) months from the decedent’s death.
With the Revenue District Officer/Collection Agent/duly authorized treasurer of the city or municipality where the decedent was domiciled at death; if no legal residence in the Philippines, with the Office of the Commissioner of Internal Revenue.
At the time the return is filed by the executor, administrator, or heirs.
The entire value of the net estate is divided into brackets; each rate is imposed on the corresponding bracket (bracket-by-bracket method) with a cumulative tax computation.
The actual funeral expenses or an amount equal to 5% of the gross estate, whichever is lower, but in no case to exceed P100,000.
Examples include (1) expenses of the wake preceding the burial (food and drinks), and (2) publication charges for death notices (also includes telecommunications expenses for informing relatives, cost of burial plot/tombstones/monument/mausoleum but not upkeep, interment fees, etc.).
They must be duly supported by receipts, invoices, or other evidence showing the expenses were actually incurred and paid for from the estate.
It generally requires that the prior transfer was taxed (gift tax or estate tax under Title III) and finally determined and paid; the property must be identifiable as received by the decedent within five years prior to death (through gift/inheritance/gift in exchange), and the deduction is allowed only to the extent the value is included in the current gross estate, subject to limitations involving prior allowable deductions and allocation ratios.
It is the dwelling house (including the land where situated) where husband and wife or an unmarried head of a family and family members reside, certified by the Barangay Captain. It is deemed constituted when actually occupied as a family residence, and remains for as long as any beneficiary actually resides therein (with rules on temporary absence).
The family home must be the actual residential home at death (certified by Barangay Captain), its value must be included in the gross estate of persons who died on/after July 28, 1992, and the deductible amount must be the fair market or zonal value as declared/included, but not exceeding P1,000,000.
The excess over P1,000,000 is subject to estate tax; only up to P1,000,000 is deductible.
Donor’s tax is computed on the total net gifts made during the calendar year using a bracketed rate schedule, applying the tax on each bracket cumulatively.
The donor’s tax is 10% of the net gifts if the donee/beneficiary is a stranger. A stranger is one who is not: (i) brother, sister (whole/half blood), spouse, ancestor, and lineal descendant; or (ii) a relative by consanguinity in the collateral line within the fourth degree.
The donor’s tax return is filed within 30 days from the date the gift is made; the tax is paid at the time the return is filed.