 TRANSFER TAX- burden imposed upon the right to gratuitously transfer or transmit

property, tangible or intangible, from one person to another

 Transfer tax is onerous
 Imposed upon the donor or the estate
 Kinds of transfer taxes
a. Estate- what is taxed is the right to gratuitously transfer an inheritance that will take
effect upon the death of the transferor (succession)
b. Donor- what is taxed is the right to gratuitously transfer such property that will take
effect upon the donor’s lifetime (donation)
Simplified
Estate Tax Donor’s Tax
1. Subject Right to transfer Right to transfer
2. Taxpayer Estate Donor
3. Liability to pay Administrator, executor or legal heir Donor
4. Effectivity Upon death Lifetime of donor and done
5. Tax base Net estate Net gift
6. Ceiling (exemption) Php200,000 Php100,000
7. Filing Within 6 months from date of death Within 30 days from date of donation
8. Top rates 20% 15%- relative; 30%- stranger

 ESTATE TAX- tax imposed upon the right of a person to gratuitously transfer or transmit
his property, tangible or intangible, to the person called to succession that will take
effect upon his death
 Benefit Received Theory- inheritance including all the property, rights and obligations
of a person is protected by the state and in return, the government needs revenue to
defray its expenses
 State Partnership Theory- in giving protection and safeguarding of a person’s wealth,
the state has the right to collect in order to compensate the effort or service it may
render
 Estate tax is a national tax mandated under Sec. 2 of the same code
 Being lifeblood of government, collection is not conditioned upon any outcome of a
probate proceeding
 It is the BIR whose tasked to determine the amount of taxes due upon subject estates
 Safety measures to ensure the collection of estate tax:
a. Payment before delivery by executor or administrator
- No judge shall authorize executor judicial administrator to deliver a distributive
share to any party interested in the estate unless a certification from the
Commissioner that the estate tax has been paid is shown
b. Non- registration for non-payment of estate tax
- RD shall not register in the Registry of Property any document transferring real
property or real rights unless a certification from the Commissioner that the
transfer tax had been paid is shown
c. Bank Disallowance
 - Certification is required if (1) the bank has knowledge of the death of the person
and (2) the deceased maintained a bank deposit account alone, or jointly with
another
- Bank shall not allow any withdrawal from said deposit account unless the
Commissioner has certified that the estate taxes imposed have been paid
 Administrator or any one of heirs may, upon authorization by the
Commissioner, withdraw an amount not exceeding Php20,000
d. Administrative, civil or criminal case
 Law governing the imposition of estate tax is governed by the statute in force at the time
of death
 Estate tax accrues at the death of the decedent
 Estate tax due is computed based on taxable net estate, to wit:
Gross Estate
Less: Ordinary deductions= Net estate before surviving spouse
Less: Share of surviving spouse= Net estate before special deductions
Less: Special deductions= Net taxable estate
 GROSS ESTATE- value of all the property, real or personal, tangible or intangible,
wherever situated of the decedent at the time of his death
- If non-resident and alien, only part of the entire gross estate which is situated in
the Philippines is taxable
- IMMOVABLE PROPERTY- those properties or assets of the decedent that are
considered permanent in nature, fixed or those which cannot be moved from one
place to another without impairing its original state or condition
- MOVABLE- properties or assets of the decedent that are impermanent and can be
moved from one place to another
- INTANGIBLE PERSONAL PROPERTY-Under Sec. 104 of the NIRC, the following:
a. Franchise which must be exercised in the Philippines
b. Shares, obligations, or bonds issued by any corporation organized or
constituted in the Philippines
c. Shares, obligations, or bonds by any foreign corporation, 85% of the business
of which is located in the Philippines
d. Shares, obligations or bonds issued by any foreign corporation if such have
acquired a business situs in the Philippines
e. Shares or rights in any partnership, business, or industry established in the
Philippines