Published 14 June 2019, The Daily Tribune
On 14 February 2019, President Rodrigo R. Duterte signed Republic Act No. 11213, otherwise known as the “Tax Amnesty Act” (the “Act”), which grants a one-time opportunity for taxpayers to settle tax obligations as of 31 December 2017. The Tax Amnesty Act includes amnesty on estate tax which offers an opportunity for taxpayers to obtain immunity from civil, criminal, and administrative cases and penalties for failure to timely pay and settle estate tax liabilities. Thus, rather than paying estate tax at a much higher tax rate, plus interests, surcharge, and applicable compromise penalties, the estate tax amnesty may be availed of by paying only six percent (6%) of the decedent’s total net taxable estate without penalties.
The Bureau of Internal Revenue (“BIR”) has issued the implementing rules and regulations for the estate tax amnesty program, Revenue Regulations No. 06-2019 (the “IRR”). Published last 31 May 2019, the IRR will take effect within fifteen (15) days from the day of its publication or on 15 June 2019. Within two (2) years from the effectivity of the IRR, executor or administrator, legal heirs, transferees or beneficiaries of decedents who died on or before 31 December 2017 may now apply for the estate tax amnesty.
Estate tax amnesty should be filed with the BIR Revenue District Office (“RDO”) having jurisdiction over the last residence of the decedent. If the decedent is not a resident of the Philippines, the ETAR should be filed with (i) the RDO where the executor or administrator of the decedent is registered, (ii) the RDO having jurisdiction over the executor or administrator’s legal residence, or (iii) RDO No. 39 – South Quezon City if the decedent does not have an executor or administrator in the Philippines.
The BIR Form No. 2118-EA or the Estate Tax Amnesty Return (“ETAR”), the Acceptance Payment Form (“APF”), other documentary requirements (as outlined in the Guidelines and Instructions for ETAR), such as the certified true copy of the death certificate, titles and tax declaration of real properties, Deed of Extra-Judicial Settlement or Affidavit of Self-Adjudication, shall be presented to the concerned RDO for endorsement of the APF. The RDO’s endorsement in the APF must be obtained prior to payment of the estate amnesty tax. Authorized agent banks and revenue collection offices of the BIR will not accept payment of estate amnesty tax unless the APF is duly endorsed by the proper RDO.
After payment, the ETAR, APF with proof of payment and other documentary requirements shall be submitted to the RDO within the two (2)-year effectivity period of the IRR. Failure to submit within said period will be tantamount to non-availment of the estate tax amnesty, and any payment may be applied against the total regular estate tax due inclusive of penalties. Within fifteen (15) calendar days from receipt of the application for estate tax amnesty, the RDO shall issue a Certificate of Availment of the Estate Tax Amnesty.
The estate tax amnesty covers estate tax liabilities of decedent/s who died on or before 31 December 2017, with or without deficiency estate tax assessment being issued. The IRR has clarified that estate tax amnesty may not be availed for delinquent estate tax liabilities; in such case, delinquent estate tax liabilities will be covered by the tax amnesty on delinquencies (“TAD”). To clarify, if the BIR issued an assessment of the estate tax liability of the estate of a decedent who died on or before 31 December 2017, the executor or administrator, legal heirs, and beneficiaries of the decedent may apply for the estate tax amnesty by paying the six percent (6%) tax amnesty rate. However, the estate tax amnesty is no longer applicable if the estate tax assessment has become final and executory; in such case, the executor or administrator, legal heirs, and beneficiaries of the decedent may avail of TAD by paying forty percent (40%) of the net basic tax. The guidelines, procedures and clarifications on TAD are outlined in Revenue Regulations No. 04-2019 dated 05 April 2019.
Interested parties are encouraged to take advantage of this opportunity to settle estate tax obligations through the Tax Amnesty Act and now the IRR of the estate tax amnesty program.
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