ESTATE TAX AMNESTY IN THE PHILIPPINES: WHAT IT IS AND HOW TO AVAIL IT?

WHAT IS ESTATE TAX AMNESTY?

The Estate Tax Amnesty is currently governed by Republic Act 11213, also known as the “Tax Amnesty Act.”

With the Tax Amnesty Act being implemented, it encourages estate owners to process their unsettled estates by giving them an opportunity to settle their tax obligations and granting them reasonable tax reliefs to their estates with outstanding tax liabilities. According to the Bureau of Internal Revenue of the Philippines:

“Estates covered by Estate Tax Amnesty, which have fully complied with all the conditions set forth in RR No. 6-2019, as amended by RR No. 10-2023, including the payment of Estate Tax Amnesty, shall be immune from the payment of all Estate Taxes as well as any increments and additions thereto, arising from the failure to pay any and all Estate Taxes for the period ending May 31, 2022 and prior years, and from all appurtenant civil, criminal and administrative cases, and penalties under the 1997 Tax Code, as amended. The availment of the Estate Tax Amnesty (ETA) and the issuance of the corresponding Acceptance Payment Form do not imply any admission of criminal, civil or administrative liability on the part of the availing estate.”

Section 2 of R.A. 11213 will also demonstrate the State’s objective to create a more equitable tax system by simplifying tax compliance requirements and streamlining tax administration and collection processes.

“Section 2. Declaration of Policy. – It is hereby declared the policy of the State to protect and enhance revenue administration and collection, and make the country’s tax system more equitable, by simplifying the tax compliance requirements. Towards this end, the State shall:

1. Provide a one-time opportunity to settle estate tax obligations through an estate tax amnesty program that will give reasonable tax relief to estates with deficiency estate taxes;
2. Broaden the tax base by offering a general tax amnesty for all unpaid internal revenue taxes that will help cleanse, organize, and improve the Bureau of Internal Revenue’s database;
3. Enhance revenue collection by providing a tax amnesty on delinquencies that will minimize administrative costs in pursuing tax cases and declog the dockets of the Bureau of Internal Revenue and the courts;
4. Provide a more equitable tax system by adopting a comprehensive tax reform program that will simplify the requirements on tax amnesties with the use of simplified forms, and utilization of information technology in broadening the tax base.

Under the Tax Amnesty Act, the estates of decedents who died on or before 31 December 2017, and whose estate taxes remained unpaid as of that date, are covered by the provisions of the Act. However, certain exceptions limit the applicability of the tax amnesty to specific estate tax cases, as outlined in Sections 4 and 9 of the said Act:

“Section 4. Coverage. – There is hereby authorized and granted a tax amnesty, hereinafter called Estate Tax Amnesty, which shall cover the estate of decedents who died on or before December 31, 2017, with or without assessments duly issued therefor, whose estate taxes have remained unpaid or have accrued as of December 31, 2017: Provided, however, That the Estate Tax Amnesty hereby authorized and granted shall not cover instances enumerated under Section 9 hereof.”

“Section 9. Exceptions. – The Estate Tax Amnesty under Title II of this Act shall not extend to estate tax cases which shall have become final and executory and to properties involved in cases pending in appropriate courts:

1. Falling under the jurisdiction of the Presidential Commission on Good Government;
2. Involving unexplained or unlawfully acquired wealth under Republic Act No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act, and Republic Act No. 7080 or An Act Defining and Penalizing the Crime of Plunder;
3. Involving violations of Republic Act No. 9160, otherwise known as the Anti-Money Laundering Act, as amended;
4. Involving tax evasion and other criminal offenses under Chapter II of Title X of the National Internal Revenue Code of 1997, as amended; and
5. Involving felonies of frauds, illegal exactions and transactions, and malversation of public funds and property under Chapters III and IV of Title VII of the Revised Penal Code.

PROCEDURE AND DOCUMENTARY REQUIREMENTS

In availing of the Estate Tax Amnesty, applicants must comply with specific documentary requirements and procedures to ensure a smooth and successful application process. These requirements may vary depending on the type of property involved and are generally categorized into Mandatory Requirements and Other Applicable Requirements. According to the Bureau of Internal Revenue (BIR) guidelines:

For Issuance of Certificate of Availment of Estate Tax Amnesty (ETA)

1. Certified true copy of the Death Certificate (DC)
2. Taxpayer Identification Number (TIN) of decedent and heir/s
3. For “Claims Against the Estate” arising from Contract of Loan, Notarized Promissory Note, if applicable
4. Proof of the claimed “Property Previously Taxed”, if any
5. Proof of the claimed “Transfer for Public Use”, if any
6. At least one (1) valid government ID of the executor/ administrator of the estate, or if there is no executor or administrator appointed, the heirs, transferees, beneficiaries or authorized representative

For Real Property/ies, if any

1. Certified true copy/ies of the Transfer/Original/Condominium Certificate/s of Title of real property/ies
2. Certified true copy of the Tax Declaration of real property/ies, including the improvements at the time of death or the succeeding available tax declaration issued nearest to the time of death of the decedent, if none is available at the time of death
3. Certificate of No Improvement issued by the Assessor’s Office at the time of death of the decedent, if applicable

For Personal Property/ies, if applicable

1. Certificate of Deposit/Investment/Indebtedness owned by the decedent alone, or decedent and the surviving spouse, or decedent jointly with others
2. Certificate of Registration of vehicle/s and other proofs showing the correct value of the same
3. Certificate of stocks
4. Proof of valuation of shares of stock at the time of death
5. Proof of valuation of other types of personal property

Other Requirements, if applicable

1. Duly notarized original Special Power of Attorney (SPA), if the person transacting/processing the transfer is the authorized representative or one of the heirs, designated as executor/ Administrator;
2. Certification from the Philippine Consulate or Apostille, if the document is executed abroad; or
3. Location Plan/vicinity map if the zonal value is not readily available.

For Issuance of Electronic Certificate Authorizing Registration (eCAR) Mandatory Requirements

1. Duly Endorsed Estate Tax Amnesty Return (ETAR) (BIR Form No. 2118-EA July 2021 (ENCS))
2. Acceptance Payment Form (APF – BIR Form 0621-EA July 2012 (ENCS)) with proof of payment
3. ONETT Computation Sheet of Tax Due duly approved by the Authorized Officer
4. Certificate of Availment
5. Affidavit of Self Adjudication or Deed of Extra-Judicial Settlement (EJS) of the Estate of the decedent; or Court decision/judgement if the estate has been settled judicially or there is a last will and testament

Other Requirements, if applicable

1. Duly notarized original Special Power of Attorney (SPA), if the person transacting/processing the transfer is the authorized representative or one of the heirs, designated as executor/ Administrator;
2. Certification from the Philippine Consulate or Apostille, if the document is executed abroad; or
3. Location Plan/vicinity map if the zonal value is not readily available.

The Estate Tax Amnesty Return (ETAR) may be filed either electronically or manually. Afterwards, the documentary requirements, together with the proof of payment, must be submitted to the concerned RDO. According to Revenue Regulations No. 10-2023:

“Section 9. Time and Place of Filing Estate Tax Amnesty Return (BIR Form 2118-EA) and Payment of Estate Tax Due.

For purposes of these Regulations, the Estate Tax Amnesty Return (ETAR) (BIR Form No. 2118-EA) (Annex B) shall be filed and paid, either electronically or manually, by the executor or administrator, legal heirs, transferees or beneficiaries, who wish to avail of the Estate Tax Amnesty within June 15, 2023 until June 14, 2025 with any authorized agent bank, through revenue collection officer of any Revenue District Office (RDO) or authorized tax software provider as defined in Revenue Memorandum Order (RMO) No. 8-2019.

The duly accomplished and sworn ETAR, together with the Acceptance Payment Form (APF-BIR Form No. 0621-EA) (Annex C) and the complete documents shall be presented to the concerned RDO.”

However, the Bureau of Internal Revenue (BIR) recognized the need to amend Revenue Regulations No. 10-2023 and further extend the deadline for the Estate Tax Amnesty application in order to accommodate more applicants who intend to settle their estate taxes, consistent with the government’s goal of establishing a more equitable tax system. Accordingly, the BIR issued Revenue Regulations No. 016-2025, further extending the deadline for the submission of application requirements until 30 June 2025.

The recent Revenue Regulation stated:

“Section 2. Amendment – To provide extension on the period of submission of documentary requirements for availers of the Estate Tax Amnesty under RA No. 11956, Section 9 of RR No. 6-2019, as amended by RR No. 17-2021 and RR No. 10-2023, are hereby further amended as follows:

“xxx After payment, the duly accomplished and sworn ETAR and APF with proof of payment, together with the complete documentary requirements, shall be immediately submitted to the concerned RDO in triplicate copies. Failure to submit the same until June 30, 2025 is tantamount to non-availment of the Estate Tax Amnesty and any payment made may be applied against the total regular estate tax due inclusive of penalties. xxx””

Although the deadline for availing of the Estate Tax Amnesty has already lapsed, in the event that it is extended in the future, or if an individual simply wishes to settle their estate tax obligations, it is highly recommended to engage the services of lawyers who are knowledgeable in estate tax matters before the Bureau of Internal Revenue (BIR). Doing so ensures that all documentary requirements are fully compliant with BIR regulations, minimizes the risk of issues arising during the process, promotes a smooth and efficient settlement, and most importantly, guarantees that the obligations are settled correctly without incurring unnecessary or additional costs.