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PWoustar er ‘PRESENTATIVES

RECEIVED
SEVENTEENTH CONGRESS OF THE REPUBLIC -
OF THE PHILIPPINES PATE

TH no opnt
First Regular Session ev id q
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HOUSE BILLYNO,_ 458

REGISTRATION UNIT
| BILLS AND INDEX SERV AND INDE X SERVIC!

Introduced by ANGKLA Pa

it Representative JESULITO A MANALO.

AN ACT AMENDING SECTION 84 OF REPUBLIC ACT NO. 8424, OR THE
NATIONAL INTERNAL REVENUE CODE OF THE PHILIPPINES

EXPLANATORY NOTE

The imposition of a high estate tax had always been a contentious issue.
While taxation is indeed the lifeblood of a nation, the creation of a balance between
imposing an estate tax and still leaving sufficient wealth to the people inheriting the
estate is a practical measure.

Ideally, a person works hard to provide for the necessities of his family. An
individual either puts up a business, invests or buys property, saves money in the
bank, or do all of those, with the hope that when he dies, he is assured of giving the
people he loves enough inheritance not only for their continued sustenance but
likewise for venturing into their own successful profession, investment, or business.
Taking that into consideration, a fair rate of estate tax may be imposed by the State,
so that the heirs of the decedent may still enjoy a good portion of their inheritance,
which is safely assumed to be in accordance with the will of said decedent.

Further, by reason of the progressive rates of estate tax provided under the
present law, which can reach up to a high of 20% of the value of the estate, there are
undeniably many cases whereby individuals deliberately avoid the payment of this
tax during their lifetime, They sell their properties to their heirs ahead of time, in
order to be accountable to pay only capital gains tax, which is computed at 6% of the
value of the property sold or of the consideration in the sale, whichever is higher.



Clearly, the enormous discrepancy in the rates between capital gains tax and
estate tax instigates the evasion of the latter, thereby rendering our estate taxation
system rather ineffective. Worse, the sale of the properties forming part of the estate
to one or two of his heirs, usually causes problems as far as equal distribution of his
estate among his heirs is concerned, which arises once he dies. In turn, unnecessary
protracted legal battles among these heirs spawn, and they are all unable to fully
enjoy the use of the estate they inherited.

Thus, to have a more effective taxation scheme, and to alleviate the burdens
arising from the avoidance of paying the estate tax, this bill is earnestly proposed as
a solution.

‘A. MANALO
-list Representative
ANGKLA


SEVENTEENTH CONGRESS OF THE REPUBLIC)
OF THE PHILIPPINES )

First Regular Session )

HOUSE OF REPRESENTATIVES
HOUSE BILL-NO. 498

Introduced by ANGKLA Party-list Representative JESULITO A. MANALO

AN ACT AMENDING SECTION 84 OF REPUBLIC ACT NO. 8424, OR THE
NATIONAL INTERNAL REVENUE CODE OF THE PHILIPPINES

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled,

SECTION 1. Sec. 84 of RA 8424 shall be amended as follows:

"SEC. 84, Rates of Estate Tax. - There shalll be levied, assessed, collected
and paid upon the transfer of the net estate as determined in accordance with
Sections 85 and 86 of every decedent, whether resident or nonresident of the
Philippines, a tax based on the value of such net estate, as computed in accordance
with the following schedule:

If the net estate is:

OVER BUTNOT THETAXSHALL = PLUS — OF THE EXCESS
OVER BE OVER
P 200,000 Exempt
P 200,000 P 500,000 0 6% P 200,000
P-500,000 P 2,000,000 P 15,000 6% P-500,000
P-2,000,000 —_P'5,000,000 P 135,000 6% P 2,000,000
5,000,000 P 10,000,000 P 465,000 6% P 5,000,000

P- 10,000,000 And Over P 1,215,000 6% P 10,000,000
SECTION 2. Repealing Clause. - All laws, decrees, executive orders or rules and
regulations inconsistent with this Act are hereby repealed, amended or modified
accordingly.

SECTION 3. Effectivity. - ‘This Act shall take effect after fifteen (15) days following
its publication in at least two (2) newspapers of general circulation.

Approved,