Senate Office of the Secretary TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES 25 DEC 17 P2:50 First Regular Session SENATE RECEIVED BY: S. No. 1627 Introduced by Senator Jinggoy Ejercito Estrada AN ACT REPEALING THE ESTATE TAX UNDER REPUBLIC ACT NO. 8424, OR THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED EXPLANATORY NOTE Estate Tax is a tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs and beneficiaries at the time of death and on certain transfers, which are made by law as equivalent to testamentary disposition. It is not a tax on property. It is a tax imposed on the privilege of transmitting property upon the death of the owner. 1 Under the Tax Reform for Acceleration and Inclusion (TRAIN) Act, estate tax rate is fixed at 6% based on the value of net estate determined as of the time of the death of decedent composed of all properties, less allowable deductions. The tax is consequentially shouldered by the grieving relatives upon the death of their loved one. It is an ill-timed, cruel obligation imposed on family members at the time of mourning. In many cases, the subject property involves a small residential house or a modest farm lot which end up as dead or frozen assets, instead of being harnessed into productive economic activities. In certain worst-case instances, some ultimately lose the hard-earned property due to lack of clear guidance, mounting unintended penalties, and incapacity to fully settle the financial duty. 1 https://www.bir.gov.ph/estate-tax
As the tax responsibility is already an additional financial burden in itself to grief-stricken heirs, the difficulty is further complicated by legal paper work, strict accounting procedures, and bureaucratic processes related thereto. Cognizant of these problems, many countries around the world, such as Australia, Sweden and Norway, have already repealed their estate or inheritance taxes. Our neighbors in Southeast Asia, including Singapore, Malaysia, Hong Kong and Macau, have abolished the same to promote fairness, equity and compassion in their respective tax regimes, and to make their jurisdictions attractive for investors and wealth generation. 23 Given the narrow base for estate tax and its negligible collection receipts over the years vis-à-vis the undue hardship it causes on bereaved households, more specifically on low-income families, and attendant high administrative costs, the repeal of the estate tax is hereby endorsed. JINGGOY EJERCITO ESTRADA 2 https://taxfoundation.org/research/all/federal/estate-and-inheritance-taxes-around-world/ 3 https://www.investasian.com/lifestyle/death-tax-estate/
Senate Office of the Secretary TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES First Regular Session 25 DEC 17 P2:50 SENATE RECEIVED BY: S. No. 1627 Introduced by Senator Jinggoy Ejercito Estrada AN ACT REPEALING THE ESTATE TAX UNDER REPUBLIC ACT NO. 8424, OR THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled:
Section 1. Title. - This Act shall be known as the "Estate Tax Repeal Act."
Sec. 2. Declaration of Policy. - It is hereby declared the policy of the State to
institute a tax system that is fair, efficient and supportive of economic growth, reduce 4 the financial burden of taxpayers, and simplify compliance with tax laws.
Sec. 3. Estate Tax Repeal. - Estate tax under Republic Act No. 8424, or the
6 National Internal Revenue Code of 1997, as amended, is hereby repealed.
Sec. 4. Transfer and Update of Titles and Other Properties. - Government
8 agencies shall register the transfer of and update the titles and properties in the name 9 of heirs clear of all liens and encumbrances without requiring the payment of estate tax.
Sec. 5. Transitory Provisions. - The repeal of estate tax under this Act shall
apply to the estates of persons who die on or after the effectivity of this Act. Estates of persons who died prior to the effectivity of this Act shall remain subject to estate tax laws in force and in effect at the time of death, without prejudice to applicable tax amnesty programs and relief measures under existing laws, such as Republic Act No. 11213, otherwise known as the "Tax Amnesty Act," as amended.
The obligations of executors, administrators and heirs with respect to estate tax returns and payments for deaths occurring before the effectivity of this Act shall continue to be governed by the National Internal Revenue Code and other applicable laws prior to such effectivity.
Sec. 6. Implementing Rules and Regulations. - Within sixty (60) days from the
effectivity of this Act, the Department of Finance (DOF), upon coordination with the Bureau of Internal Revenue (BIR), shall promulgate the rules and regulations to effectively implement the provisions of this Act.
Sec. 7. Repealing Clause. - All laws, decrees, executive orders, rules and
regulations and other issuances or parts thereof which are contrary to or inconsistent with this Act are hereby repealed, amended or modified accordingly.
Sec. 8. Effectivity. - This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in any two (2) newspapers of general circulation. Approved,