Presented by Hardy Lipana for Hoppler Dialogues: A Legal Counsel on Philippine TRAIN Law last May 23, 2018 at SMX Aura Convention Center.

2. TRAIN LAW
AMENDMENTS ON
ESTATETAX

3. BACKGROUND
REPUBLICACT 10963 (TRAIN LAW) - On 19
December 2017, the President signed into law
RepublicAct (“R.A.”) No. 10963. or theTax
Reform for Acceleration and Inclusion
(“TRAIN”) law
The law amends several provisions of the
National Internal Revenue Code of 1997 (“Old
Tax Code”) Act on
(1) Individual income taxation
(2) Passive income for both individuals and
corporations
(3) Estate tax
(4) Donor’s tax,
(5) Value-added tax (“VAT”)
(6) Excise tax
(7) Documentary stamp tax (“DST”), among
others

4. OBJECTIVE
THE OBJECTIVE OFTHE
TRAIN LAW ISTO CREATE
A FAIR, SIMPLER, AND
MORE EFFECTIVETAX
COLLECTION SYSTEM

5. EFFECTIVITY:
JANUARY 01, 2018

6. ESTATE TAX
Tax imposed on the right of the deceased person to transmit
his/her estate/properties to his/her lawful heirs and
beneficiaries at the time of death. It is commonly referred to
as “Inheritance Tax”

7. TRAIN LAW
AMENDMENTS ON
ESTATETAX

8. BIR IMPLEMENTING
RULES AND
REGULATIONS (IRR)
BIR REVENUE ISSUANCES RR NO. 12 – 2018
CONSOLIDATED REVENUE REGULATIONSON
ESTATETAX AND DONOR’S TAX
INCORPORATINGTHE AMENDMENTS
INTRODUCED BY RA 10963 OTHERWISE
KNOWN AS “TAX REFORMACCELERATION
AND INCLUSION (TRAIN) LAW

9. ESTATE TAX RATES

10. SEC. 84 OF NATIONAL INTERNAL
REVENUE CODE OF 1997 (OLDTAX
CODE)
ESTATETAXTABLE
NET ESTATE ESTATETAX
Over But not Over TheTax Shall be Plus
Of the Excess
Over
P 200,000.00 Exempt
P 200,000.00 500,000.00 0 5 % P 200,000.00
500,000.00 2,000,000.00 P 15,000.00 8 % 500,000.00
2,000,000.00 5,000,000.00 135,000.00 11 % 2,000,000.00
5,000,000.00 10,000,000.00 465,000.00 15 % 5,000,000.00
10,000,000.00 1,215,000.00 20 % 10,000,000.00

11. R.A. NO 10963TRAIN LAW
Flat rate of 6% of Net Estate

12. ALLOWABLE DEDUCTIONS
FROM GROSS ESTATE

13. ORDINARY DEDUCTIONS
AMENDMENTS OLD TAX CODE TRAIN LAW
Funeral Expenses P200K Repealed
Judicial Expenses Actual supported by
receipts
Repealed

14. SPECIAL DEDUCTIONS
AMENDMENTS OLD TAX CODE TRAIN LAW
Standard Deductions P1 Million P5 Million
Family Home P1 Million P10 Million
Medical Expenses P500K Repealed

15. ADMINISTRATIVE
PROVISIONS

16. ADMINISTRATIVE PROVISIONS
AMENDMENTS OLD TAX CODE TRAIN LAW
Filing of Notice of
Death
Within two (2) months
upon decedent’s death
Repealed
Period of Filing Six (6) months from time
of death
One (1) year from time
death
CPA Statement Gross Estate exceeds P2
Million
Gross Estate exceeds P5
Million
Withdrawal from Bank
Account
Not allowed until the
estate tax is settled
Allowed but with 6%
withholding tax
Mode of Payment Cash *Cash Installment or
Partial Disposition

17. *MODE OF PAYMENT
PROVISIONS

18. TRAIN LAW
A. Cash Installment
-Within 2 years upon filing of estate tax return
-EstateTax return must be filed within one year from date of
decedent’s death
-The terms of payment should be indicated in the EstateTax
returns subject to approval of BIR
-In case of lapse of 2 years without payment of total tax due, the
balance shall be due and subject to penalties and interests
-No civil penalties or interest may be imposed on estates
permitted to pay on installments
Mode of Payment Provisions

19. B. Partial Disposition of Estate and
Application of its Proceeds to the EstateTax
Due
-EstateTax return must be filed within one (1) year from date of decedent’s
death
-A written request for partial disposition must be submitted together with a
notarized undertaking that the proceeds will be used to settle the estate tax
due
-The estate tax shall be proportionate to the property being disposed of
-An e-Car shall be issued upon proof of payment of the proportionate
estate tax due
-In case failure to pay the total tax estate due from the proceeds of the
subject property for disposition, the estate tax will become due and
demandable and will be subject to surcharge and interest prescribed from
deadline of payment of estate tax

20. Illustrative
Examples
(OldTax Code
vs.TRAIN Law)

21. EXAMPLE #1
MR. RICH, an 85 year-old businessman, married,
died on NewYear’s eve, December 31, 2017. He left
a number of real estate properties.
His Gross Estate is as follows:
Family Home - P10 Million
Real Properties - P15 Million
Other Assets - P5 Million
Before his death, he incurred P5M worth of medical
expenses.The funeral expenses amounted to about
P1M.

22. MR. RICH EstateTax Liability
(Under the OldTax Code)
Based on OldTax Code:
Net Estate P10 Million and Above
EstateTax = P1,215,000 + (P13,650,000 – P10,000,000) * 20%
P1,215,000 + P730,000.00
P1,945,000.00
Real Properties 25,000,000.00
Other Assets 5,000,000.00
Gross Estate 30,000,000.00
Less:
Ordinary Deductions
Funeral Expenses 200,000.00
Estate After Deductions 29,800,000.00
Less:
Special Deductions
Family Home 1,000,000.00
Standard Deductions 1,000,000.00
Medical Expenses 500,000.00
Total Special Deductions 2,500,000.00
Net Estate 27,300,000.00
Less:
1/2 Share of Surviving
Spouse 13,650,000.00
NetTaxable Estate 13,650,000.00
Estate Tax Due 1,945,000.00
Over But not Over TheTax Shall Plus
Of the Excess
Over
P 200,000.00 Exempt
P 200,000.00 500,000.00 0 5 % P 200,000.00
500,000.00 2,000,000.00 P 15,000.00 8 % 500,000.00
2,000,000.00 5,000,000.00 135,000.00 11 % 2,000,000.00
5,000,000.00 10,000,000.00 465,000.00 15 % 5,000,000.00
10,000,000.00 1,215,000.00 20 % 10,000,000.00

23. EXAMPLE #2
MR. RICHER, an 85 year-old businessman, married,
died on the new year, January 1, 2018. He owned a
number of real estate properties.
His Gross Estate is as follows:
Family Home - P10 Million
Real Properties - P15 Million
Other Assets - P5 Million
Before his death, he incurred P5M worth of medical
expenses.The funeral expenses amounted to about
P1M.

24. MR. RICHER EstateTax Liability
(Under theTRAIN Law)
Based onTRAIN Law
Flat rate of 6%
EstateTax = P7,500,000 * 6%
P450,000.00
Real Properties 25,000,000.00
Other Exclusive Properties 5,000,000.00
Gross Estate 30,000,000.00
Less:
Ordinary Deductions
Funeral Expenses 0.00
Estate After Deductions 30,000,000.00
Less:
Special Deductions
Family Home 10,000,000.00
Standard Deductions 5,000,000.00
Medical Expenses 0.00
Total Special Deductions 15,000,000.00
Net Estate 15,000,000.00
Less:
1/2 Share of Surviving
Spouse 7,500,000.00
NetTaxable Estate 7,500,000.00
Estate Tax Due 450,000.00

25. COMPARISON
MR. RICH ESTATETAX
(UNDER OLDTAX CODE)
MR. RICHER ESTATETAX
(UNDERTRAIN LAW)
P1.945 Million P450K

26. ESTATETAX AMNESTY
UPDATES

27. HOUSE BILL 4814
AN ACT GRANTING
AMNESTY INTHE
PAYMENT OF
ESTATETAX

28. KEY PROVISIONS
• Coverage – Cover EstateTaxes forTaxableYear 2016 and prior years with or
without assessments, that have remained unpaid as of December 31, 2016.
• Availment of the Amnesty – Filing of EstateTax Amnesty Return with the BIR and
payment of 6% of the decedent’s net estate within two (2) years from the issuance
of the IRR of this Act.
• Immunities & Privileges -Provides immunity from payment of estate tax,
administrative penalties (surcharge & interest) including civil and criminal
liabilities.

29. UPDATES
The House of Representative approved on 3rd
and final reading, House Bill No. 4814 (HB
4814) or the “EstateTax Amnesty Law,” last
February 13, 2017.The bill was already
transmitted to Senate for concurrence on
February 15, 2017. It was read on first reading
and referred to the Senate onWays and Means
on 20 February 2017.

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