tax credit and administration

7/29/2019 Tax Credit and Administration

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Transfer & BusinessTaxation

“Notes in Tax Credit and

Administration” Edelyn P. Aterado



The estate tax imposed by the authority of a foreign

country is credited with the amounts of any estate taximposed the Philippine government:

Limitations on Credit

a) The amount of the tax credit in respect to the tax

paid to any country shall not exceed the sameproportion of the tax against which such credit is

taken, which the decedent’s net estate situated

within such country taxable under the Tax Code

bears to his entire net estate;

b) The total amount of the credit shall not exceed thesame proportion of the tax against which such

credit is taken, which the decedent’s net estate

situated outside the Philippines taxable under the

Tax Code bears to his entire net estate.

1. Tax Credit for Estate Taxes paid to a

Foreign Country



a) Usufruct

o To determine the value of the right ofusufruct, use or habitation, as well as

that of annuity, there shall be taken

into account the probable life of the

beneficiary in accordance with the latestBasic Standard Mortality Table, to be

approved by the Secretary of Finance,

upon recommendation of the Insurance

Commissioner.

2. Determination of the Value of the Estate



b) Properties

o The estate shall be appraised at its fair

market value as of the time of death.

However, the appraised value of real property

as of the time of death shall be, whichever

is higher of –

(1)The fair market value is determined by the

Commissioner, or

(2)The fair market value as shown in the

schedule of values fixed by the Provincialand City Assessors (FMV AS DETERMINED BY THE

ASSESSOR OR FMV AS DETERMINED BY THE BIR

WHICHEVER IS HIGHER)

2. Determination of the Value of the Estate(Continuation)



In all cases of transfers subject to tax, or

where, though exempt from tax, the gross value of the

estate exceeds P20,000, the executor, administrator or

any of the legal heirs, as the case may be, within 2

months after the decedent’s death, or within a like

period after qualifying as such executor or

administrator, shall give a written notice thereof tothe Commissioner.

Transfers that require notice of death:

1) Subject to tax

2) The gross value of the estate exceeds P20,000

(even though exempt)

3. Notice of Death to be Filed



In all cases of transfers subject to estate tax, or

where, though exempt from tax, the gross value of the

estate exceeds P200,000, or regardless of the grossvalue of the estate, where the said estate consists of

registered or registrable property such as real

property, motor vehicle, shares of stock or other

similar property for which a clearance from the Bureau

of Internal Revenue is required as a condition

precedent for the transfer of ownership thereof in the

name of the transferee, the executor, or the

administrator, or any of the legal heirs, as the case

may be, shall file a return under oath in duplicate.

Transfers that require the filing of estate tax

return: (a) subject to tax; (b) the gross value of the

estate exceeds P200,000 (even though exempt); (3)

regardless of value where the estate consists of

registrable property.

4. Estate Tax Returns



Estate tax returns showing a gross value

exceeding P2,000,000 should be supported with a

statement duly certified to by a Certified PublicAccountant continuing the following:

a) Itemized assets of the decedent with their

corresponding gross value at the time of hisdeath, or in the case of a nonresident, not a

citizen of the Philippines, of that part of his

gross estate situated in the Philippines.

b) Allowed itemized deductions from gross estate.

c) The amount of tax due whether paid or still due

and outstanding

4. Estate Tax Returns (Continuation)



The estate tax return shall be filed within

6 months from the decedent’s death.

The Commissioner shall have authority togrant, in meritorious cases, a reasonable

extension not exceeding 30 days for filing the

return.

5. Time for filing & Extension of time for

filing



Except in cases where the Commissioner otherwise

permits, the estate tax return shall be filed with an

authorized agent bank, or Revenue District Officer,Collection Officer, or duly authorized Treasurer of the

city or municipality in which the decedent was

domiciled at the time of his death or if there be no

legal residence in the Philippines, with the Office of

the Commissioner.

TIME OF PAYMENT:

The estate tax shall be paid at the time the return

is filed by the executor, administrator or the heirs.

(PAY AS YOU FILE SYSTEM)

6. Place of Filing



When the Commissioner finds that the payment on the

due date of the estate tax or of any part thereof would

impose undue hardship upon the estate or any of theheirs, he may extend the time for payment of such tax

or any part thereof not to exceed 5 years, in case the

estate is settled through the courts, or 2 years in

case the estate is settled extrajudicially. In such

case, the amount in respect of which the extension isgranted shall be paid on or before the date of the

expiration of the period of the extension, and the

running of the Statute of Limitations for assessment

shall be suspended for the period of any such

extension. (5 YEARS IF JUDICIAL; 2 YEARS IF

EXTRAJUDICIAL)

7. Extension of Time of Payment



The estate tax shall be paid by the executor or

administrator before delivery to any beneficiary of his

distributive share of the estate. Such beneficiaryshall to the extent of his distributive share of the

estate, be subsidiarily liable for the payment of such

portion of the estate tax as his distributive share

bears to the value of the total net estate.

The term “executor” or “administrator” means the

executor or administrator of the decedent, or if there

is no executor or administrator appointed, qualified,

and acting within the Philippines, then any person in

actual or constructive possession of any property ofthe decedent.

8. Liability for Payment



If the executor or administrator makes a written

application to the Commissioner for determination ofthe amount of the estate tax and discharge from

personal liability therefore, the Commissioner as soon

as possible, and in any event within one (1) year after

the making of such applications, or if the application

is made before the return is filed within one (1) yearafter the return is filed, but not after the expiration

of the period prescribed for the assessment of the tax

shall notify the executor or administrator of the

amount of the tax.

The executor or administrator, upon payment of the

amount of which he is notified, shall be discharged

from personal liability for any deficiency in the tax

thereafter found to be due and shall be entitled to a

receipt or writing showing such discharge.

9. Discharge of Executor or Administrator from Personal

Liability



No judge shall authorize the executor or

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.

10. Payment before Delivery by Executor or Administrator

(Duty of a judge)



REGISTRAR OF REGISTER OF DEEDS

Registers of Deeds shall not register in the

Registry of Property any document transferring real

property or real rights therein in any chattel

mortgage, by way of gifts inter vivos or mortis causa,

legacy or inheritance, unless a certification from the

Commissioner that the tax imposed and actually due

thereon had been paid is shown, and they shall

immediately notify the Commissioner, Regional Director,

Revenue District Officer, or Revenue Collection Officer

or Treasurer of the city or municipality where their

offices are located, of the non payment of the taxdiscovered by them.

11.Duties of Certain Officers and Debtors



LAWYER

Any lawyer, notary public, or any government officer

who, by reason of his official duties, intervenes in

the preparation or acknowledgment of documents

regarding partition or disposal of donation intervivos

or mortis causa, legacy or inheritance, shall have theduty of furnishing the Commissioner, Regional Director,

Revenue District Officer or Revenue Collection Officer

of the place where he may have his principal office,

with copies of such documents and any information

whatsoever which may facilitate the collection of theaforementioned tax.

11.Duties of Certain Officers and Debtors(Continuation)



DEBTOR

Neither shall a debtor of the deceased pay his debts

to the heirs, legatee, executor or administrator of his

creditor, unless the certification of the Commissioner

that the estate tax imposed had been paid is shown; but

he may pay the executor or judicial administratorwithout said certification if the credit is included in

the inventory of the estate of the deceased.

11.Duties of Certain Officers and Debtors(Continuation)



SECRETARY OF CORPORATIONNo transfer shall be allowed to any new owner in the

books of any corporation, sociedad anonima,

partnership, business, or industry organized or

established in the Philippines any share, obligation,

bond or right by way of gift inter vivos or mortiscausa, legacy or inheritance, unless a certification

from the Commissioner that the estate tax due thereon

has been paid is shown.

12. Payment of Tax Antecedent to the Transfer of Shares,

Bonds or Rights (Duties of a Secretary of

Corporation and a Bank



BANKIf a bank has knowledge of the death of a person,

who maintained a bank deposit account alone, or jointly

with another, it shall not allow any withdrawal from

the said deposit account, unless the Commissioner has

certified that the estate tax imposed thereon has beenpaid. The administrator of the estate or any one (1)

of the heirs of the decedent may, upon authorization by

the Commissioner, withdraw an amount not exceeding

Twenty Thousand Pesos (P20,000) without the said

certification. For this purpose, all withdrawal slips

shall contain a statement to the effect that all of the

joint depositors are still living at the time of

withdrawal by any one of the joint depositors and such

statement shall be under oath by the said depositors.

12. Payment of Tax Antecedent to the Transfer of Shares,

Bonds or Rights (Duties of a Secretary of

Corporation and a Bank (Continuation)



a) Amounts received for war damages

b) Amounts received from United States VeteransAdministrative

c) Benefits received from Government Service Insurance

System (GSIS)

d) Benefits received from Social Security System (SSS)

13.Benefits exempt by special laws



END

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