TRANSFER TAXES they are imposed upon the privilege of disposing gratuitously private

properties. These are levied on the transmission of properties from a decedent to his heirs or
from a donor to a donee.

KINDS OF TRANSFER TAX (under the NIRC)

1. ESTATE TAX
2. DONORS TAX

DISTUINGUSH TRANSFER TAX FROM INCOME TAX

TRANSFER TAX INCOME TAX

Upon what imposed

Tax on transfer of property Tax on income

Rates Applicable

Rates are lower Rates of individual income taxes are higher 5% to

1. Estate tax 5% to 20% 32%
2. Donors tax 2% to 15% or 30%
Exemptions

Lesser exemptions More exemptions

DISTINGUISH DONORS TAX FROM ESTATE TAX

DONORS TAX ESTATE TAX

Nature of transfer

During the lifetime of the donor After death of decedent

May take place between natural and juridical Transfer takes place only between natural persons
persons
Amount exempt

P100,000 P200,000
Rate of Tax

2-15% 5-20%
Grant of exemption

Sec. 101, NIRC Sec. 87, NIRC

Grant of Deductions

None Sec. 86, NIRC

REVIEW NOTES IN TAXATION II 1

 Notice requirement

GR: Notice of donation is not required Notice of death required in the ff. Cases:
1. Transaction subject to estate tax
Exceptions: 2. Transaction exempt from estate tax but exceeds
1. Donations to NGO worth at least P50,000. P20,000
Provided, not more than 30% of which will be used
for administration purposes.
2. Donation to any candidate, political party, or
coalition of parties.
Notice, where fixed

Within 2 months after the decedents death or after

qualifying as executor or administrator
Filing of return

A transfer subject to donors tax 1. A transfer subject to estate tax

2. Exempt from tax but the gross estate exceeds
P200,000
3. Estate consists or registered or registrable
property, regardless of value of gross estate
Contents of return

1. Each gift made during the calendar year w/c is to 1. Value of the gross estate
be included in computing net gifts. 2. Deductions under Sec. 86, NIRC
2. The deductions claimed and allowable 3. Other pertinent information
3. Any previous net gifts made during the same 4. If gross estate exceeds P2M, certified by a CPA
calendar year as to assets, deductions, tax due, whether paid or
4. The name of the donee not
5. Such further information as may be required by
rules and regulations made pursuant to law
Time of filing Return

Within 30 days after donation was made Within 6 months from death of decedent
Extension for filing return

None 30 days in meritorious cases

Payment of Tax due

Pay as you file Pay as you file

Extension of Payments

None GR: Extension of payment is not allowed

Exception: When it would impose undue hardship
upon the estate or any of the heirs, extension may
be allowed but not to exceed 5 years in case of
judicial settlement or 2 years in case of extra-
judicial settlement.
Requirement for grant of extension of payment

Bond not exceeding double the amount of the tax

and with such sureties as the commissioner deems
necessary

REVIEW NOTES IN TAXATION II 2

 ESTATE TAX it is an excise tax imposed upon the privilege of transmitting property at the time
of death amd on the privilege that a person is given in controlling to a certain extent the
disposition of his property to take effect upon death.

ESTATE TAX FORMULA:

Gross Estate (Sec. 85)

Less: (1) Deductions (Sec. 86)

(2) Net share of the surviving spouse

Net Estate

x Tax rate (Sec. 84)

Estate tax due

Less: Tax credit (if any) (Sec. 86 (E) or 110 (B)

Estate Tax Due, if any

GROSS ESTATE INCLUDE:

If the decedent is a resident citizen, non-resident If the decedent is a non-resident alien

citizen, or resident alien
Value at the time of death of all: Value at the time of death of all:
1. Real property wherever situated 1. Tangible personal property situated in the
2. Personal property, tangible or intangible, Philippines
wherever situated 2. Intangible personal property with situs in the
3. To the extent of the interest therein of the Philippines unless exempted on the basis of
decedent at the time of his death reciprocity

ITEMS OF GROSS ESTATE:

1. Decedents interest
2. Transfer in contemplation of death
3. Revocable transfer
4. Property passing under general power of appointment
5. Proceeds of life insurance
6. Prior interests
7. Transfers of insufficient consideration

REVIEW NOTES IN TAXATION II 3

DEDUCTION FROM GROSS ESTATE

If the decedent is a resident citizen, non- If the decedent is a non-resident alien (EPTN)
resident citizen or resident alien (EPTFSMAN)
1. Expenses, losses, indebtness, and taxes; 1. Expenses, losses, indebtness, and taxes;
a. Funeral expenses a. Funeral expenses
b. Judicial expenses for testamentary or b. Judicial expenses for testamentary or
inestate proceedings inestate proceedings
c. Claims against the estate c. Claims against the estate
d. Claims against insolvent persons included d. Claims against insolvent persons included
in the gross estate in the gross estate
e. Unpaid mortagages or indebtness upon the e. Unpaid mortagages or indebtness upon the
property property
f. Unpaid taxes f. Unpaid taxes
g. Losses incurred during the settlement of g. Losses incurred during the settlement of
the estate the estate
2. Property previously taxed 2. Property previously taxed
3. Transfers for public use 3. Transfers for public use
4. Family Home 4. Net share of the surviving spouse in the conjugal
5. Standard deduction or community property
6. Medical expenses
7. Amount received by heirs under R.A. No. 4917
(Retirement Benefits of Employees of Private
Firms)
[Link] share of the surviving spouse in the conjugal
or community property

Filing of Notice of Death (Sec. 89, NIRC)

1. Transfers subject to tax

2. Even if exempt from tax, if gross value of estate exceeds P20,000

Estate Tax Return (Sec. 90[A], NIRC)

1. Transfers subject to tax

2. Where gross value of estate exceeds P200,000
3. Where estate consists of registered or registrable property, regardless of amount

Period of estate tax return must be filed within 6 months from the decedents death (Sec. 90[B], NIRC)

Extension to file an estate tax return in MERITORIOUS CASES but not to exceed 30 days (Sec. 90[C],
NIRC)

Estate Tax Return be filed (Sec. 90[D], NIRC)

1. If it is a resident decedent to an authorized agent bank, RDO, Collection Officer, or duly

authorized Treasurer in the city or municipality where the decedent was domiciled at the time of
his death, or to the Office of the CIR.
2. If it is a non-resident decedent to the RDO or to the Office of the CIR

REVIEW NOTES IN TAXATION II 4

 DONORS TAX it is an excise tax imposed on the privilege of transfering property by way of a
gift inter vivos based on pure act of liberality without any or less than adequate consideration and
without any legal compulsion to give.

Liable to pay donors tax:

1. Taxable w/n and outside Philippines

a. Resident citizen
b. Non-resident citizen
c. Resident alien
d. Domestic corporation

2. Taxable only w/n the Philippines

a. Non-resident aliens
b. Foreign corporation

GROSS GIFTS all property, real or personal, tangible or intangible that was given by the donor to the
donee by way of gift, w/o the benefit of any deduction. (Sec. 104, NIRC)

VALUE-ADDED TAX it is an indirect tax and the amount of tax may, by law, be shifted or passed on to
the buyer, transferee or lessee of the goods, properties or services. (Sec. 105, NIRC)

Persons Liable for VAT:

1. Sells, barters, exchanges, leases goods or properties;

2. Render services; and
3. Imports goods shalls be subject to VAT imposed in Sec. 106 to 108 of the NIRC.

GROSS SELLING PRICE means the total amount of money or its equivalent w/c the purchaser pays or
is obligated to pay to the seller in consideration of the sale, barter or exchange of the goods or properties,
excluding the value-added tax.

GROSS RECEIPTS means the total amount of money or its equivalent representing the contract price,
compensation, service fee, rental or royalty, including the amount charged for materials supplied with the
services and deposits and advance payments actually or constructively received during the taxable
quarter for the services performed or to be performed for another person, excluding value-added tax.

TAX RATE 12% of the gross recipts derived from the sale or exchange of service, including the use or
lease of properties. (Sec. 108, NIRC)

INPUT TAX it means the VAT due from or paid by a VAT-registered person in the course of his trade or
business on importation of goods or local purchase of goods or services, including lease or use of
property, from a VAT-registered person. It shall also include the transitional input tax determined in
accordance with Sec. 111 of the NIRC. (Sec.110 [A][3], NIRC)

OUTPUT TAX it means the VAT due on the sale or lease of taxable goods or properties or services by
any person registered or required to register under Sec. 236 of the NIRC. (Sec. 110[A][3], NIRC)

REVIEW NOTES IN TAXATION II 5

PRESUMPTIVE INPUT TAX CREDIT it is an input tax credit allowed to persons or firms engaged in
the:

1. processing of:

a. Sardines
b. Mackerel
c. Milk

2. manufacturing of:

a. Refined sugar
b. Cooking oil
c. Packed noodle based instant meals

VAT PAYABLE FORMULA:

Output tax

LESS: Input tax

VAT payable/excess tax credits

Return and Payment of VAT

GR: Every person liable to pay the VAT shall file a quarterly return of the amount of his gross sales or
receipts within 25 days following the close of each taxable quarter prescribed for each taxpayer.

XPN: Any person, whose registration has been cancelled in accordance with Sec. 236, shall file a return:

1. Within 25 days from the date of cancellation of registration;

2. Provided, that only one consolidated return shall be filed by the taxpayer for his principal place of
business or head office and all branches. (Sec. 114[A], NIRC)

REVIEW NOTES IN TAXATION II 6