Estate Tax Calculation Fundamentals

Estate Tax Payable Calculation

• Gross estate is categorized into exclusive, conjugal/communal, and total amounts.
• Ordinary deductions are subtracted from the gross estate to arrive at the estate after deductions.
• Special deductions are then subtracted from the estate after deductions to determine the net estate.
• The surviving spouse's share is deducted from the net estate to calculate the net taxable estate.
• Foreign tax credit is determined by comparing the foreign net taxable estate to the world net taxable estate, with different calculations for single and multiple foreign countries.

Estate Tax Requirements

• An estate tax return, filed in duplicate under oath, is required. This return must include the value of the gross estate, itemized deductions, and the amount of tax due.
• If the gross estate exceeds ₱5,000,000, a CPA certification is needed. The CPA certification should detail itemized assets, deductions, and the tax due.

Filing Deadlines and Venues

• The estate tax return must be filed within one year of the date of death. A 30-day extension may be granted by the CIR in meritorious cases.
• For resident decedents, file with the RDO where the decedent was domiciled at death.
• For non-resident decedents, file with the RDO where the executor/administrator is registered; if unregistered, use the RDO with jurisdiction over the decedent's legal residence. Alternatively, file with the Office of the Commissioner if the executor/administrator has no Philippine legal residence. Other filing locations include accredited agent banks, revenue district offices, collection agents, and the city/municipality treasurer where the decedent or administrator was domiciled.

Payment of Estate Tax

• Estate tax is paid when the return is filed ("pay as you file").
• If there's insufficient cash, installment payments or partial estate disposition are options.

Installment Payment Options

• Estate tax can be paid in installments over two years without penalties, subject to CIR approval. Payment plans include 24 monthly, 8 quarterly, 4 semi-annual, or 2 annual payments.

Partial Disposition of Estate

• A written request and notarized undertaking are needed to use proceeds from partial estate disposition for tax payment. Failure to pay the full tax due from these proceeds results in immediate payment, with penalties and interest.

Liability for Payment

• The executor or administrator pays the estate tax before distributing inherited shares. Multiple executors/administrators are severally liable.