What is estate tax?

Succession or transfer of estate (upon death) is a privilege. It is law that allows a person to transmit his property upon death and/or to control to a certain extent the disposition of his property to take effect upon his death. Estate tax is an excise tax imposed upon such privilege.

The transfer of the net estate of every decedent, whether resident or non-resident of the Philippines, as determined in accordance with the Tax Code, shall be subject to the estate tax. The entire value of the net estate is divided into brackets and each rate is imposed on the corresponding bracket. Note that the Tax Reform for Acceleration and Inclusion (TRAIN) or Republic Act No. 10963 has made changes to estate tax laws in the Philippines.

It is said that TRAIN has simplified estate tax and donor's tax. The TRAIN aims to simplify property purchases, transfers and donations in order to make the land market more efficient thus ensuring the usage of properties is maximized. The estate tax is now reduced to 6% based on the net value of the property. It also has a standard deduction of ₱5 million as well as a ₱10 million exemption on the family home. The donor tax is also reduced to 6% of the net donations for gifts above ₱250,000 yearly.

It is a well-settled rule that estate taxation is governed by the statute in force at the time of death of the decedent. The estate tax accrues as of the death of the decedent and the accrual of the tax is distinct from the obligation to pay the same. Upon the death of the decedent, succession takes place and the right of the State to tax the privilege to transmit the estate vests instantly upon death.

Simplified Estate and Donor's Tax. Reform for Acceleration and Inclusion Act. From Wikipedia, the free encyclopedia. https://en.wikipedia.org/wiki/Tax_Reform_for_Acceleration_and_Inclusion_Act#Simplified_Estate_and_Donor's_Tax

REVENUE REGULATIONS NO. 2-2003. BUREAU OF INTERNAL REVENUE. December 16, 2002. RR 2‐2003. https://www.lawphil.net/administ/bir/rr/rr02_03.pdf