Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

\ 3794

HOUSE BILL No.

Introduced by Honorable Rosenda Ann Ocampo

EXPLANATORY NOTE

One of the most heartbreaking experiences is losing a loved one while failing to
enjoy the fruits of inheritance left by a decedent. The occurrence of death in the family is
not an easy burden. The number of things that need to be settled and the various costs
attendant to it further intensify the feeling of grief and loss.

The last estate tax amendment was done in 1997 by virtue of Republic Act (RA) No.
8424 or the National Internal Revenue Code of 1997. However, after almost two decades,
the threshold amounts on which the various taxes are based have not been _ adjusted
accordingly. As inflation keeps rising and the purchasing power of the Peso decreasing, the
amount of taxes being paid by the taxpayers have diminished the income of ordinary
Filipinos,

This bill intends to lessen the burden on the surviving spouse and heirs of a decedent
in settling their estate tax liabilities. The threshold amount of P200,000 in net estate liable
to estate taxes as well the allowable deductions for medical expenses, funeral expenses,
standard deduction and value of family home no longer represents their present actual
value. By increasing the value of the estate tax exemption and other allowable deductions,
we are giving the surviving spouse and heirs the opportunity to enjoy the fruits of labor of
their deceased loved ones,

Moreover, in case of sudden death in the family, rich and affluent individuals are
able to minimize their estate taxes by having availed estate tax planning in advance.
However, poor and middle-income families are not able to avail such intricate and costly
plan, thus, bearing the full burden of settling the estate tax.


Increasing the exemptions and deductions for estate tax purposes would also ensure
a greater chance for government to maximize the estate tax take not otherwise collected
from ordinary families who are drained from the emotional, physical and material loss of
their loved ones.

In view of the foregoing, the immediate passage of this bill is earnestly sought

We Well, ae

ROSENDA ANN OCAMPO



Republic of the Philippines
HOUSE OF REPRESENTATIVES
‘Quezon City

SEVENTEENTH CONGRESS
First Regular Session

3794

HOUSE BILL No.

Introduced by Honorable Rosenda Ann Ocampo

AN ACT
REVISING THE SCHEDULED RATES OF ESTATE TAX COMPUTATION AND
INCREASING THE ALLOWABLE DEDUCTIONS THEREON AMENDING FOR THIS
PURPOSE SECTIONS 84, 86, 89 AND 97 OF TITLE Ill, CHATER |, ESTATE TAX
OF 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. Section 84 of the National Internal Revenue Code (NIRC) of 1997, as

amended, is hereby amended to read as follows:

“Section 84. Rates of Estate Tax - There shall 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
non-resident 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 But Not Over TheTaxshallbe Plus Of the Excess Over

P 500,000 Exempt
P 500,000 1,250,000 0 5% P 500,000
1,250,000 5,000,000 P 23,000 8% 1,250,000
5,000,000 12,500,000 —-299,000 11% 5,000,000
12,500,000 25,000,000 1,058,000 15% 12,500,000

25,000,000 and Over 2,783,000 20% 25,000,000



PROVIDED, THAT EVERY THREE (3) YEARS AFTER THE EFFECTIVITY OF
THIS ACT, THE PRESIDENT OF THE PHILIPPINES SHALL ADJUST THE
AMOUNTS HEREINSTATED TO ITS PRESENT VALUE USING THE CONSUMER
PRICE INDEX (CPI) AS PUBLISHED BY THE PHILIPPINE STATISTIC AUTHORITY

PSA).”

SECTION 2. Section 86 of the National Internal Revenue Code (NIRC) of 1997, as
amended, is hereby amended to read as follows:

“Section 86. Computation of Net Estate — For the purpose of the tax
imposed in this Chapter, the value of the net estate shall be determined:

{A) Deductions Allowed to the Estate of Citizen or a Resident. ~ In the
case of a citizen or resident of the Philippines, by deducting from the value of
the gross estate -

(1) Expenses, Losses, Indebtedness, and taxes - Such amounts

(a) For actual funeral expenses or in an amount equal to five percent
(5%) of the gross estate, whichever is lower, but in no case to exceed
FIVE HUNDRED THOUSAND PESOS (P500,000.00) [Two Hundred
Thousand Pesos (P200,000)];

{b) x00;

(€) x05;

(d) xxx; and

(€) vx.
(2) Property Previously Taxed. —xxx;
(3) Transfers for Public Use. ~xxx;

(4) The Family Home. ~ An amount equivalent to the current fair
market value of the decedent’s family home: Provided, however, that
if the said current fair market value exceeds TWO MILLION PESOS
[P2,000,000.00) [One Million Pesos (P1,000,000)], the excess shall be
subject to estate tax. As a sine qua non condition for the exemption or
deduction, said family home must have been the decedent's family
home as certified by the barangay captain of the locality;

(5) Standard Deduction. -An amount equivalent to TWO MILLION
PESOS (P2,000,000.00) [One Million Pesos (P1,000,000)];


(6) Medical Expenses. -Medical expenses incurred by the decedent
within one (1) year prior to his death which shall be duly
substantiated with receipts: Provided, That in no case shall be
deductible medical expenses exceed ONE MILLION PESOS
{P1,000,000.00) [Five hundred Thousand Pesos (P500,000)];

(7) xxx,”

SECTION 3. Section 89 of the National Internal Revenue Code (NIRC) of 1997 as
amended, is hereby amended to read as follows:

“Section 89. Notice of Death to be Filed In all cases of transfers
subject to tax, or where, though exempt from tax, the gross value of the
estate exceeds TWO HUNDRED THOUSAND PESOS (P200,000.00) [Twenty
Thousand Pesos (P20,000)], the executor, administrator or any of the legal
heirs, as the case may be, within two (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 to the Commissioner.”

SECTION 4. Section 97 of the National Internal Revenue Code (NIRC) of 1997, as
amended, is hereby amended to read as follows:

“Section 97. Payment of Tax Antecedent to the Transfer of Shares,
Bonds or Rights —xxx. If a bank has knowledge of the death of the 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 taxes imposed thereon by this Title have
been paid: Provided, however, That 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 TWO HUNDRED
THOUSAND PESOS (P200,000.00) [Twenty Thousand Pesos (P20,000)]
without the said certification, For this purpose all withdrawal slips shall
contain a statement to the effect that all the joint depositors and such
statement shall be under oath by the said depositors.”

SECTION 5. Implementing Rules and Regulations. The Bureau of Internal Revenue
shall, within sixty (60) days from the effectivity of this Act, issue the necessary rules and
regulations for the effective implementation of this Act.


SECTION 6. Separability Clause. if any provision of this Act is subsequently declared
as invalid or unconstitutional, other provisions hereof which are not affected thereby shall
remain in full force and effect.

SECTION 7. Repealing Clause. All laws, decrees, orders rules and regulations, and
other issuances, or parts thereof, inconsistent with the provisions of this Act are hereby
repéaled or modified accordingly.

SECTION 8. Effectivity Clause. This Act shall take effect fifteen (15) days after its

publication in the Official Gazette or in a newspaper of general circulation

APPROVED.