16/01/2021
ESTATE TAX AMNESTY DEADLINE IS ON JUNE 15, 2021
Please take time to read below:
WHAT IS ESTATE TAX?
Estate Tax is a tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs and beneficiaries at the time of death and on certain transfers, which are made by law as equivalent to testamentary disposition. It is not a tax on property. It is a tax imposed on the privilege of transmitting property upon the death of the owner. The Estate Tax is based on the laws in force at the time of death notwithstanding the postponement of the actual possession or enjoyment of the estate by the beneficiary.
Why is the Estate Tax Important?
The estate tax is very important because the properties or estate of the deceased cannot be transferred to the heirs without the payment of estate tax. Even if there is already a buyer, the heirs cannot sell the property and transfer the property in the name of the buyer if the title is not yet transferred under their names.
However, due to the high estate tax rates, the estate tax proved to be a burden to the heirs in enjoying the benefits of their property inheritance. Since this is an unplanned expense on the part of the heirs, in most cases, they fail to settle the estate taxes on time resulting in the accumulation of penalties and interests and locking up of properties and delay in their development.
What is the Estate Tax Amnesty?
The Estate Tax Amnesty is a component of the Tax Amnesty Act or Republic Act No. 11213 which was signed into law last 14 February 2019. The Estate Tax Amnesty aims to resolve the common problem of most Filipinos who were not able to settle the estate taxes of their deceased predecessors and transfer the title of their inherited properties under their names.
The BIR started accepting application for the estate tax amnesty last June 17, 2019, following the release and publication of the Implementing Rules & Regulations (IRR) for the estate tax amnesty under BIR Revenue Regulations No. 6-2019. The estate tax amnesty program runs for two (2) years and will expire on June 15, 2021.
Taxpayers and property owners should avail of this once in a lifetime opportunity to settle the estate taxes of their property inheritance and transfer the titles of the properties under their name at a much lower cost without penalties, surcharge and interest
One of the major problems in the real estate market today is a lot of inherited properties are still under the name of the deceased relatives. The heirs cannot enjoy the benefits of their inheritance because they cannot sell these properties. Why? Because they haven’t transferred the title under their names yet. One of the main reasons is the failure to settle the estate taxes.
What are the BENEFITS of the Estate Tax Amnesty?
1. Lower Estate Taxes
Prior to the estate tax amnesty and TRAIN Law, estate tax rates could go as high as twenty (20%) percent of the decedent’s net taxable estate. Under the estate tax amnesty, the estate tax rate is fixed at six (6%) percent of net taxable estate or PHP5,000 whichever is higher.
2 .Waiver of Tax Penalties, Interest & Surcharges
Under the tax amnesty, the tax penalties, interest and surcharges resulting from non-payment of estate tax are waived. In most cases, the amount of accumulated penalties and interest is more than the value of the estate tax. The waiver of penalties and interest will translate to a huge “tax savings” for taxpayers.
3. Immunities from Civil and Administrative Cases
Those who availed of the estate tax amnesty and have fully complied with the conditions will be immune from all civil, criminal and administrative cases under the 1997 Tax Code as amended.
What happens when the Estate Tax Amnesty EXPIRES?
When the estate tax amnesty expires, the old estate tax rates will prevail in the computation of estate tax. Likewise, there will be additional penalties and interest accruing from the time of death of decedent resulting in higher estate tax obligations which may cause financial burden for the heirs.
Please contact 0942-103-6875 to avail of our services...
