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Republic of the Philippines pare 07 SEP 2016

HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRES:
First Regular en PEOIST ATION UNIT
NOE X SERVICE

HOUSE BILL

Introduced by: Hon. Angelina “Heler’ D.L. Tan, M.D.

AN ACT AMENDING SECTIONS 84, 86, 89, 9¢ AND 97 OF THE NATIONAL,
INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER
PURPOSES

EXPLANATORY N JTE

‘This measure proposes amendments to the estate tax provided under Republic
Act No. 8424, otherwise known as the National Ir ernal Revenue Code (NIRC) of 1997
or the Tax Reform Act of 1997. The last estate ta; amendment was made in 1997 and
after almost a couple of decades the threshold an ounts on which the various taxes are
based have not been adjusted.

Hence, the need to make the adjustments inasmuch as inflation keeps rising and
the purchasing power of peso is decreasing and the amount of taxes being paid by the
taxpayers have encroached significantly on the income of ordinary Filipinos resulting to
meager take home pay.

Under the law, the one liable for the payment of estate tax is the estate of the
decedent but in the payment of such tax the burden of complying with the requirements
of the law rests ultimately on the heirs.

The NIRC, as amended, requires the taxpayer to secure TIN for the estate, file
notice of death within 2 months after the decedent's death, file estate tax return and pay
the tax within 6 months from decedent's death, determine the gross estate and allowable
deductions and compute the estate tax which may require the services of a certified
public accountant (CPA) depending on the value of the gross estate, and secure tax
clearance before the title to the properties can be transferred in the name of the heirs.
‘These requirements are additional burden on the members of the family who are

still grieving for the loss of their loved one.

With the passage of this bill, the actual funeral expenses, and medical expenses
incurred within one year immediately preceding the death of the decedent, can now be
claimed in full as deductions against the gross estate. It increases the value of the family
home and the amount of standard deduction to be allowed as deductions against the
gross estate and provides automatic indexation of the value or amount every six years.

Moreover, it increases the threshold amounts and provides automatic indexation
every six years for the requirement of filing an estate tax return and submission of a CPA
certification. It will only require the filing of notice of death if the estate is required to

“NT. TIVES:


file an estate tax return, Ultimately, the p,oposal allows withdrawals from the bank
account of the decedent, in an amount not ey »ee: ing the aggregate amount of the estate
tax due, funeral expenses and other expenses ‘¢!:ted to the settlement of the estate.

While the bill, in effect, removes the ¢x: mption from estate tax of a net estate
valued at not more than P200,006, its entirety, however, would benefit the heirs or
taxpayers due to a higher allowable deducticus against the gross estate and a lower
estate tax rate of 10%,

‘The result is a more simplified estate ta ation to ease the burden on the heirs and
a broader tax base, which can be done by ¢icouraging more heirs to file estate tax
returns and pay the corresponding estate taxes

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

f

ANGELINA “HELEN” D.L. TAN, M.D.
4th District, Quezon.


Republic of the Philippines
HOUSE OF REPRESEN’ TIVES
Quezon City

SEVE ‘NTH CONGRESS:

t Regular Session

3528

HOUSE BILL NO,

Introduced by: Hon. Angelina “Helen” D.L. Tan, M.D. _
AN ACT AMENDING SECTIONS 84, 86, 89, 90, AND 97 OF THE NATIONAL
INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER
PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in
e ed:

ION 1. Section 84 of the National Internal Revenue Code (NIRC) of 1997,
as amended, is hereby amended to read as follows:

“SEC. 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 nonresident of the Philippines, a ‘T
PERCENT (10%) tax based on the value of such net estatef, as computed in
accordance with the following schedule:].

“[If the net estate is:]

“[Over] [But Not Over] [The Tax Shall Be] [Plus] _ [Of the Excess Over]
[P200,000] [Exempt]

“[P200,000 500,000] fo 5% P 200,000]
“[500,000 2,000,000] [P15,000 8% 500,000]
“(2,000,000 §,000,000] [135,000 11% 2,000,000]
“[5,000,000 10,000,000] [456,000 15% 5,000,000]
“[10,000,000 And Over] [1,215,000 20% 10,000,000)

SE Section 86(A) of the National Internal Revenue Code of 1997, as

amended, is hereby further amended to read as follows:

“SEC, 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 Two hundred thousand
pesos (P200,000)];

“(b) XXX
“(¢) XXX
“(d) XXX
“(@) XXX
“(2) XXX
“(g) 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 [One million pesos (P1, 000,000),] TWO MILLION FIVE HUNDRED
THOUSAND PESOS (P2,500,000), 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 localityf.]:
PROVIDED, FURTHER, THAT NOT LATER THAN SIX (6) YEARS AFTER
THE EFFECTIVITY OF THIS ACF AND EVERY SIX (6) YEARS
THEREAFTER, THE PRESIDENT OF THE PHILIPPINES SHALL ADJUST
THE AMOUNT HEREIN STATED TO ITS PRESENT VALUE USING THE
CONSUMER PRICE INDEX (CPI), AS PUBLISHED BY THE PHILIPPINE
STATISTICS AUTHORITY (PSA).

“(5) Standard Deduction. - An amount equivalent to [One million pesos (P1,
000,000).|_ TWO MILLION FIVE HUNDRED THOUSAND PESOS
(22,500,000): PROVIDED, HOWEVER, THAT NOT LATER THAN SIX (6)
YEARS AFTER THE EFFECTIVITY OF THIS ACT AND EVERY SIX (6)
YEARS THEREAFTER, THE PRESIDENT OF THE PHILIPPINES SHALL
ADJUST THE AMOUNT HEREIN STATED TO ITS PRESENT VALUE USING
THE CONSUMER PRICE INDEX (CPD, AS PUBLISHED BY THE
PHILIPPINE STATISTICS AUTHORITY (PSA). .

(6) Medical Expenses. - Medical Expet incurred by the decedent within one
(a) year prior to his death which shall be duly substantiated with receipts[: Provided,
‘That in no case shall the deductible medical expenses exceed Five Hundred Thousand
Pesos (P500, 000)].

“(7) XXX

ER”
SEC. 3. Section 89 of the National Internal Revenue Code of 1997, as amended, is
hereby further amended to read as follows:

“SI

89. Notice of Death to be Filed. - In all cases of transfers subject to tax, or


where THE TATE IS REQUIRED TO FILE ESTATE TAX RETURN, [though
exempt from tax, the gross value of the estate exceeds Twenty thousand pesos
(P20,000),] the executor, administrator or any of the legal heirs, as the case may be,
ithin [two (2)] SEX (6) months after the decedent's death, or within a like period after
ing as uch executor or administrator, shall give a written notice thereof to the

. Section 90 of the National Internal Revenue Code of 1997, as amended, is
urther amended to read as follows:

go. Estate Tax Returns. -

(A) Requirements. - In all cases of transfers subject to the tax imposed herein, or
where[, though exempt from tax,] the gross value of the estate exceeds [Two hundred
thousand pesos (P200. ,000)] FIVE HUNDRED THOUSAND PESOS S (F500, ,000),
or regardle:
or registrable property such as real property, motor vehicle, sha
similar property for which a clearance from the Bureau of Internal Revenue is oe
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, setting forth:

“() XXX

“() XXX

“(g) XXX

“Provided, however, That estate tax returns showing a gross value exceeding Two
million pesos (P2, 000,000) shall be supported with a statement duly certified to by a
Certified Public Accountant containing the following:

“(a) XXX

“(b) XXX

“(¢) XX

“PROVIDED, FURTHER, THAT NOT LATER THAN SIX (6) YEARS
AFTER THE EFFECTIVITY OF THIS ACT AND EVERY SIX (6) YEARS
THEREAFTER, THE PRESIDENT OF THE PHILIPPINES SHALL ADJUST
THE AMOUNT HEREIN STATED TO ITS PRESENT VALUE USING THE

CONSUMER PRICE INDEX (CPI), AS PUBLISHED BY THE PHILIPPINE
STATISTICS AUTHORITY (PSA).

“(B) Time for Filing. - For the purpose of determining the estate tax provided for
in Section 84 of this Code, the estate tax return required under the preceding Subsection
(A) shall be filed within [six (6) months] ONE YEAR (1) YEAR from the decedent's
death.


A certified copy of the schedule of partition and the order of the court approving
the same shall be furnished the Commissioner within thirty (30) days after the
promulgation of such order. :

SEC. 5. Section 97 of the National Internal Revenue Code of 1997, as amended, is
hereby further amended to read as follows:

“SEC. 97. Payment of Tax Antecedent to the ‘Tr
- There shall not be transferred 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 morti
causa, legacy or inheritance, unless a certification from the Commissioner that the taxes
fixed in this Title and due thereon have been paid is shown.

nsfer of Shares, Bonds or Rights.

“Ifa 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 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
OR HIS/HER DULY AUTHORIZED REPRESENTATIVE, withdraw an amount
not exceeding [Twenty thousand pesos (P20,000)] THE AGGREGATE AMOUNT
OF THE ESTATE TAX DUE, FUNERAL EXPENSES AND OTHER EXPENSES.
RELATED TO THE SETTLEMENT OF THE ESTATE 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,”

SEC. 6. Implementing Rules and Regulations. — The Secretary of Finance, shall,
upon the recommendation of the Commissioner of Internal Revenue, promulgate not
later than thirty (g0) days upon the effectivity of this Act the necessary rules and
regulations for its proper and effective implementation.

SEC. 7. Separability Clause. - If any provision or part hereof is held invalid or
unconstitutional, the remainder of the law or the provision not otherwise affected shall
remain valid and subsisting.

SEC. 8. Repealing Clause. - Any law, presidential decree or issuance, executive
order, letter of instruction, administrative order, rule or regulation contrary to or
inconsistent with the provisions of this Act is hereby modified or amended accordingly.

SEC. 7. Effeetivity. - ‘This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in at least two (2) newspapers of general
circulation,

Approved,