Bicam approves simplified estate tax

The Bicameral Conference Committee has approved the provision in the proposed tax reform package which relaxes the rates of estate tax.

Senator Ralph Recto on Wednesday said the Senate and House conferees on the proposed Tax Reform for Acceleration and Inclusion (TRAIN) agreed to simplify estate tax to a flat tax rate of six percent.

At present, there are six tiers of the estate tax, which exempts assets worth 1200,000, and slaps the highest rate of 20 percent for estate values in excess of 110 million.

Recto noted that due to this scheme, “billions in properties left behind by hundreds of thousands of departed Filipinos remain in limbo for the failure of their heirs to pay the estate tax, either for lack of knowledge or lack of money or both.”

The Bicameral Conference Committee also agreed to increase the estate tax-exempt value of a family home from 11 million to 110 million.

“We have decided to increase it by ten-fold to reflect real estate realities. The current rates were set 20 years ago when homes were a lot cheaper. But a 12-million worth house now is only as big as matchbox, why would you impose taxes on it?” he said.

Recto said the standard allowable deduction has also been raised to 1 5 million to cover claims for medical and funeral expenses of the deceased.

They also relaxed the rule on the amount which can be withdrawn from the deceased’s bank deposits, which are automatically frozen upon the demise of the account holder.

“We have agreed to allow an heir, or executor, or administrator, to make withdrawals, with no limit, for as long as a withholding tax is paid every transaction,” Recto said.

The bicameral committee also agreed to extend the filing of the estate tax return from six months to one year, and allow installment of payment within two years.

“Certification from a Certified Public Accountant is not anymore required if the estate value does not exceed 15 million. We removed also the notice of death prior to estate settlement,” Recto added.

The bicameral committee, meanwhile, has yet to deliberate on excise tax to be imposed on coal and cosmetic procedures, which, according to Senator Franklin Drilon, are faced by strong opposition from lawmakers and affected industries.