BIR Revenue Regulations No. 12-2018
BIR Revenue Regulations No. 12-2018
BIR Revenue Regulations No. 12-2018
12-2018
Issued on: January 25, 2018
Gross Estate
SEC. 4. COMPOSITION OF THE GROSS ESTATE. – The gross
estate of a decedent shall be comprised of the following properties
and interest therein at the time of his/her death, including revocable
transfers and transfers for insufficient consideration, etc.:
• 1. Residents and citizens – all properties, real or personal, tangible or
intangible, wherever situated.
• 2. Non-resident aliens – only properties situated in the Philippines provided,
that, with respect to intangible personal property, its inclusion in the gross
estate is subject to the rule of reciprocity provided for under Section 104 of
the NIRC.
Provided, That amounts withdrawn from the deposit accounts of a
decedent subjected to the 6% final withholding tax imposed under
Section 97 of the NIRC, shall be excluded from the gross estate for
purposes of computing the estate tax.
In the case of shares of stocks, the fair market value shall depend on
whether the shares are listed or unlisted in the stock exchanges.
Unlisted common shares are valued based on their book value while
unlisted preferred shares are valued at par value. In determining the
book value of common shares, appraisal surplus shall not be
considered as well as the value assigned to preferred shares, if there
are any. On this note, the valuation of unlisted shares shall be exempt
from the provisions of RR No. 06-2013, as amended.
For shares which are listed in the stock exchanges, the fair market
value shall be the arithmetic mean between the highest and lowest
quotation at a date nearest the date of death, if none is available on
the date of death itself.
2.2.1.1 The debt instrument must be duly notarized at the time the
indebtedness was incurred, such as promissory note or contract of
loan, except for loans granted by financial institutions where
notarization is not part of the business practice/policy of the financial
institution-lender;
2.2.2.3. Certified true copy of the latest audited balance sheet of the
creditor with a detailed schedule of its receivable showing the unpaid
balance of the decedent-debtor. Moreover, a certified true copy of the
updated latest subsidiary ledger/records of the debt of the debtor-
decedent, (certified by the creditor, i.e., the officers mentioned in the
preceding paragraphs) should likewise be submitted.
4.2. Taxes which have accrued as of the death of the decedent which
were unpaid as of the time of death. This deduction will not include
income tax upon income received after death, or property taxes not
accrued before his death, or the estate tax due from the transmission
of his estate.
• 7.2.1. The family home must be the actual residential home of the decedent
and his family at the time of his death, as certified by the Barangay Captain
of the locality where the family home is situated;
• 7.2.2. The total value of the family home must be included as part of the
gross estate of the decedent; and
• 7.2.3. Allowable deduction must be in an amount equivalent to the current
fair market value of the family home as declared or included in the gross
estate, or the extent of the decedent’s interest (whether conjugal/community
or exclusive property), whichever is lower, but not exceeding P10,000,000.
8. Amount received by heirs under Republic Act No. 4917. – Any amount
received by the heirs from the decedent’s employer as a consequence
of the death of the decedent-employee in accordance with Republic
Act No. 4917 is allowed as a deduction provided that the amount of
the separation benefit is included as part of the gross estate of the
decedent.
9. Net share of the surviving spouse in the conjugal partnership or
community property. – After deducting the allowable deductions
appertaining to the conjugal or community properties included in the
gross estate, the share of the surviving spouse must be removed to
ensure that only the decedent’s interest in the estate is taxed.
SEC. 7. COMPUTATION OF THE NET ESTATE OF A DECEDENT
WHO IS
A NON-RESIDENT ALIEN OF THE PHILIPPINES. – The value of
the net estate of a decedent who is a non-resident alien in the
Philippines shall be determined by deducting from the value of that
part of his gross estate which at the time of his death is situated in the
Philippines the following items of deductions:
1. Standard deduction. – A deduction in the amount of Five Hundred
Thousand Pesos (P500,000) shall be allowed without need of
substantiation. The full amount of P500,000 shall be allowed as
deduction for the benefit of the decedent.
2. The proportion of the total losses and indebtedness which the value
of such part bears to the value of his entire gross estate wherever
situated. Losses and indebtedness shall include the following:
Less: Deductions
Ordinary Deductions
Special Deductions
(2) Decedent is married, the family home is conjugal property, more than
P10,000,000:
Exclusive Conjugal Total
Conjugal Properties:
Less:
Ordinary Deductions
Special Deductions
Spouse
Conjugal Deductions
(2,000000)
(3) Decedent is married, the family home exclusive property, more than
P10,000,000:
Exclusive Conjugal Total
Conjugal Properties:
Less:
Ordinary Deductions
Special Deductions
Spouse
Less: Deductions
Conjugal Properties:
Less:
Ordinary Deductions
Special Deductions
Spouse
(6) Decedent is married, the family home exclusive property and below
P10,000,000:
Exclusive Conjugal Total
Conjugal Properties:
Exclusive Properties:
Less:
Ordinary Deductions
Special Deductions
Spouse
1.2. Itemized deductions from gross estate allowed in Section 86; and
1.3. The amount of tax due whether paid or still due and outstanding.
2. Time for filing estate tax return. – For purposes of determining the
estate tax, the estate tax return shall be filed within one (1) year from
the decedent’s death. The Court approving the project of partition shall
furnish the Commissioner with a certified copy thereof and its order
within thirty (30) days after promulgation of such order.
3. Extension of time to file estate tax return. – The Commissioner or any
Revenue Officer authorized by him pursuant to the NIRC shall have
authority to grant, in meritorious cases, a reasonable extension, not
exceeding thirty (30) days, for filing the return. The application for the
extension of time to file the estate tax return must be filed with the
Revenue District Office (RDO) where the estate is required to secure
its Taxpayer Identification Number (TIN) and file the tax returns of the
estate, which RDO, likewise, has jurisdiction over the estate tax return
required to be filed by any party as a result of the distribution of the
assets and liabilities of the decedent.
4. Time for payment of the estate tax. – As a general rule, the estate tax
imposed under the NIRC shall be paid at the time the return is filed by
the executor, administrator or the heirs.
5. Extension of time to pay estate tax. – When the Commissioner finds
that the payment of the estate tax or of any part thereof would impose
undue hardship upon the estate or any of the heirs, he may extend the
time for payment of such tax or any part thereof not to exceed five (5)
years in case the estate is settled through the courts, or two (2) years
in case the estate is settled extrajudicially. In such case, the amount in
respect of which the extension is granted shall be paid on or before
the date of the expiration of the period of the extension, and the
running of the statute of limitations for deficiency assessment shall be
suspended for the period of any such extension.
Where the request for extension is by reason of negligence,
intentional disregard of rules and regulations, or fraud on the part of
the taxpayer, no extension will be granted by the Commissioner.
Any amount paid after the statutory due date of the tax, but within the
extension period, shall be subject to interest but not to surcharge.
6. Payment of the estate tax by installment and partial disposition of estate. –
In case of Insufficiency of cash for the immediate payment of the total
estate tax due, the estate may be allowed to pay the estate tax due
through the following options, including the corresponding terms and
conditions:
6.1. Cash installment
• i. The cash installments shall be made within two (2) years from the date of
filing of the estate tax return;
• ii. The estate tax return shall be filed within one year from the date of
decedent’s death;
• iii. The frequency (i.e., monthly, quarterly, semi-annually or annually),
deadline and amount of each installment shall be indicated in the estate tax
return, subject to the prior approval by the BIR;
• iv. In case of lapse of two years without the payment of the entire tax due, the
remaining balance thereof shall be due and demandable subject to the
applicable penalties and interest reckoned from the prescribed deadline for
filing the return and payment of the estate tax; and
• v. No civil penalties or interest may be imposed on estates permitted to pay
the estate tax due by installment. Nothing in this subsection, however,
prevents the Commissioner from executing enforcement action against the
estate after the due date of the estate tax provided that all the applicable laws
and required procedures are followed/observed.
6.2. Partial disposition of estate and application of its proceeds to the estate
tax due
i. The disposition, for purposes of this option, shall refer to the
conveyance of property, whether real, personal or intangible property,
with the equivalent cash consideration;
ii. The estate tax return shall be filed within one year from the date of
decedent’s death;
iii. The written request for the partial disposition of estate shall be
approved by the BIR. The said request shall be filed, together with a
notarized undertaking that the proceeds thereof shall be exclusively
used for the payment of the total estate tax due;
iv. The computed estate tax due shall be allocated in proportion to the
value of each property;
v. The estate shall pay to the BIR the proportionate estate tax due of
the property intended to be disposed of;
vii. In case of failure to pay the total estate tax due out from the
proceeds of the said disposition, the estate tax due shall be
immediately due and demandable subject to the applicable penalties
and interest reckoned from the prescribed deadline for filing the return
and payment of the estate tax, without prejudice of withholding the
issuance of eCAR(s) on the remaining properties until the payment of
the remaining balance of the estate tax due, including the penalties
and interest.
9. Liability for payment. – The estate tax imposed under the NIRC shall
be paid by the executor or administrator before the delivery of the
distributive share in the inheritance to any heir or beneficiary. Where
there are two or more executors or administrators, all of them are
severally liable for the payment of the tax. The eCAR pertaining to
such estate issued by the Commissioner or the Revenue District
Officer (RDO) having jurisdiction over the estate, will serve as the
authority to distribute the remaining/distributable properties/share in
the inheritance to the heir or beneficiary. The executor or administrator
of an estate has the primary obligation to pay the estate tax but the
heir or beneficiary has subsidiary liability for the payment of that
portion of the estate which his distributive share bears to the value of
the total net estate. The extent of his liability, however, shall in no
case exceed the value of his share in the inheritance.
SEC. 10. PAYMENT OF TAX ANTECEDENT TO THE TRANSFER
OF SHARES, BONDS OR RIGHTS AND BANK DEPOSITS
WITHDRAWAL. – There shall not be transferred to any new owner in
the books of any corporation, sociedad anonima, partnership,
business, or industry organized or established in the Philippines any
share, obligation, bond or right by way of gift inter vivos or mortis
causa, legacy or inheritance, unless an eCAR is issued by the
Commissioner or his duly authorized representative.
If a bank has knowledge of the death of a person, who maintained a
bank deposit account alone, or jointly with another, it shall allow the
withdrawal from the said deposit account, subject to a final withholding
tax of six percent (6%) of the amount to be withdrawn, provided that
the withdrawal shall only be made within one year from the date of the
decedent. The bank is required to file the prescribed quarterly return
on the final tax withheld on or before the last day of the month
following the close of the quarter during which the withholding was
made. The bank shall issue the corresponding BIR Form No. 2306
certifying such withholding. In all cases, the final tax withheld shall not
be refunded, or credited on the tax due on the net taxable estate of
the decedent.