Inheritance and Estate Tax in Philippines

When a person dies in the Philippines, the transfer of their accumulated wealth to heirs triggers the estate tax -- a national tax administered by the Bureau of Internal Revenue (BIR) under the National Internal Revenue Code (NIRC) of 1997, as reformed by the Tax Reform for Acceleration and Inclusion Act (TRAIN, Republic Act No. 10963, effective January 1, 2018) and implemented through Revenue Regulations No. 12-2018. The TRAIN Law replaced a graduated schedule that reached 20% with a single flat rate. The related donor's tax (gift tax) follows the same 6% structure. For a broader view of Philippine taxation, see the Philippines country overview.

What is the current Philippine estate tax rate?

For deaths occurring on or after January 1, 2018, a flat estate tax of 6% is imposed on the net estate of every decedent -- whether the decedent was a Philippine citizen, a resident alien, or a non-resident alien [1][2]. "Net estate" means the gross estate (all property, rights, and interests valued at fair market value at the date of death) reduced by allowable deductions. The executor, administrator, or any heir is required to file BIR Form 1801 (Estate Tax Return) and pay the tax in full within one year from the date of death [1][3]. The BIR Commissioner may grant a single extension of up to 30 days in meritorious cases. Critically, no Certificate Authorizing Registration (eCAR) -- the BIR clearance document required to transfer titles, bank accounts, shares of stock, and registered vehicles -- will be released until the estate tax is fully paid [2].

Who is liable for Philippine estate tax, and which assets are covered?

Liability turns on the decedent's status at the time of death [1][3]:

• Philippine citizens and resident aliens: the entire worldwide gross estate (all property wherever situated) is brought into the computation.
• Non-resident, non-citizen aliens (NRNA): only property with a Philippine situs is taxable. Philippine situs includes real property in the Philippines; tangible personal property physically present here; franchise rights exercised here; shares or bonds issued by Philippine corporations; and shares of a foreign corporation where at least 85% of its business is in the Philippines. Intangible personal property of an NRNA may be exempt if the decedent's country grants reciprocal treatment to Filipino decedents -- a reciprocity that must be affirmatively established [3].

The standard deduction for an NRNA decedent is PHP 500,000 (not the PHP 5,000,000 available to citizens/residents), and the family home deduction is not available to NRNAs.

What deductions reduce the gross estate for citizens and residents?

Under the TRAIN Law and RR 12-2018, the following deductions apply to the gross estate of a citizen or resident alien decedent [1][2][4]:

• Standard deduction: PHP 5,000,000. Automatic; no documentation required. This replaced the pre-TRAIN itemized deductions for funeral expenses, judicial expenses, and medical expenses, which are no longer separately deductible for deaths on or after January 1, 2018.
• Family home deduction: up to PHP 10,000,000. The fair market value of the decedent's family home (the dwelling where the family resides) is deductible up to PHP 10,000,000. Any excess of FMV over PHP 10,000,000 is included in the taxable net estate. The property must be duly certified as the family home.
• Claims against the estate. Legitimate, notarized debts and claims against the estate at the time of death are deductible, including personal loans and credit balances. Claims must be substantiated with official documentation.
• Unpaid mortgages and taxes. Unpaid mortgage obligations and taxes accrued before death (excluding estate tax itself) are deductible.
• Vanishing deduction. Property included in the gross estate that was previously subjected to a Philippine transfer tax (estate tax or donor's tax) within five years before the decedent's death may qualify for a declining percentage deduction: 100% if within one year, 80% within two years, 60% within three years, 40% within four years, and 20% within five years.
• Transfers for public use. Bequests or devises to the government of the Philippines or its political subdivisions for exclusive public purposes are fully deductible.
• Retirement benefits under RA 4917. Amounts received by heirs from a registered employee benefit plan may be deductible under Republic Act No. 4917.
• Surviving spouse's share. The net share of the surviving spouse in the conjugal or community property is not part of the decedent's taxable estate. Only the decedent's 50% share of conjugal or community property enters the gross estate.

What happened to the estate tax amnesty, and what are the consequences now?

Republic Act No. 11213 (2019) originally created an estate tax amnesty program covering estates of decedents who died on or before December 31, 2017 -- that is, estates still governed by the old pre-TRAIN graduated rate schedule. The amnesty allowed heirs to settle at a flat 6% rate on the net estate without surcharges, interest, or penalties. Congress subsequently extended the availment period twice. The final extension, authorized under RA 11956 (signed December 20, 2023), set a deadline of June 14, 2025 (the June 14 Saturday deadline shifted to June 16, 2025 as the first working day) [2][5].

The amnesty window has now closed. Estates of decedents who died on or before December 31, 2017 and were not settled by June 16, 2025 are subject to the full penalty regime: a 25% surcharge for late filing, plus 12% annual interest running from the original one-year filing deadline, plus any applicable compromise penalties. The regular estate tax regime under TRAIN (6% flat rate on net estate) continues to apply to estates of decedents who died on or after January 1, 2018, but those filed beyond the one-year deadline also attract the 25% surcharge and 12% annual interest [1][2].

What is the Philippine donor's tax (gift tax)?

The TRAIN Law applies the same 6% flat rate to lifetime gifts. Under Section 99 of the NIRC as amended by RA 10963, a donor's tax of 6% is imposed on the total value of net gifts made in a calendar year that exceed PHP 250,000 [6][7]. Key features:

• The PHP 250,000 threshold is calculated on a cumulative calendar-year basis. Each successive gift in the same year is added to the running total; the 6% rate applies to the cumulative amount above PHP 250,000. A donor who makes multiple gifts to multiple recipients in the same year aggregates them all for threshold purposes.
• There is no distinction between gifts to relatives and gifts to strangers -- both pay 6% on cumulative net gifts above PHP 250,000 per year. This unified rate replaced a prior system under which relatives paid lower rates.
• The donor files BIR Form 1800 and pays any tax due within 30 days of the date of each gift. Late filing attracts the same 25% surcharge and 12% annual interest as estate tax.
• Donations to the Philippine government or its political subdivisions, accredited domestic corporations organized exclusively for religious, charitable, scientific, youth development, cultural, or educational purposes, and social welfare organizations that spend at least 30% of their funds for administrative purposes are exempt from donor's tax under the NIRC.
• Non-resident, non-citizen donors are taxed only on donations of Philippine-situated property.

Individual circumstances -- including whether property is conjugal or paraphernal, whether reciprocity applies to NRNA estates, valuation disputes with the BIR over FMV, and specific documentary requirements at the Revenue District Office -- vary significantly. The guidance on this page summarizes the statutory framework. For your specific situation, consult a qualified tax professional registered in the Philippines, such as a Philippine Certified Public Accountant (CPA) or a member of the Integrated Bar of the Philippines with tax practice experience.