Bir To Intensify Collection Of Estate Taxes

[Mr Lee]

And this is probably why it is so important to have both husband and wife's name on the property even if the non Filipino cannot own land. This is also why so many lands that we wanted to buy were never transfered from the relatives to their heirs when they were trying to sell, which was a nightmare trying to get everyone together to buy the land. Anyone know anybody who has been hit with an estate tax and if so what was taxed? MANILA, Philippines - The country's main revenue agency vowed to intensify collection of estate taxes on inheritance following dismal compliance among families of deceased individuals."We feel there is a large amount of non-compliance on estate tax," Bureau of Internal Revenue (BIR) Commissioner Joel Tan-Torres said.An estate tax is a tax on the right of a deceased person to transmit his/her estate to heirs and beneficiaries at the time of death and on certain transfers, which are made by law as equivalent to testamentary disposition.Essentially, it is not a tax on property but a tax imposed on the privilege of transmitting property upon the death of the owner. It should be filed within 6 months from decedent's death.Only 30,000 filed for estate taxes in 2008, data from the BIR showed. Tan-Torres said the number should have been much higher considering that the National Statistics Office has been recording about 400,000 deaths annually in the country.Tan-Torres vowed they would launch stricter monitoring of the transfer of properties to heirs under the BIR's "Rest in Peace" program.Under the law, a net estate amounting to P200,000 or less is exempted from estate tax while a 5% estate tax is collected from net estate amounting to P200,000 to P500,000.The estate tax rate is P15,000 on estates valued between P500,000 and P2 million, plus 8% on amount in excess of P500,000; P135,000 on between P2 million and 5 million, plus 11% in excess of P2 million; P465,000 on between P5 million and P10 million, plus 15% in excess of P5 million; and P1.215 million on over P10 million, plus 20% in excess of P10 million.On large transfers of inheritance in excess of P10 million, the BIR noted that some families have been trying to evade proper tax payment by transfering the properties to the names of the heirs even before the death of the owner of the properties so that the tax to be paid is just the donor's tax, which represents only 15% of the value of the property.Link to the actual story

[TheMason]

That's a pretty steep tax rate. Most expats will have homes worth the 2-10 million range. With the flat rates plus %, that's a lot of cash to come up with for the tax man. You would need to have about $15k saved up to satisfy the estate tax debt on a 6 million php home. No wonder people are dodging the taxes.

[Mr Lee]

That's a pretty steep tax rate. Most expats will have homes worth the 2-10 million range. With the flat rates plus %, that's a lot of cash to come up with for the tax man. You would need to have about $15k saved up to satisfy the estate tax debt on a 6 million php home. No wonder people are dodging the taxes.

But I wonder if that would apply if the house were jointly owned? I do not think so and if the wife should pass first then if jointly owned it should pass on to the husband free but to the family it would be taxable, maybe another good reason to make sure all property is jointly owned to start with, so to avoid a very large tax.

[Mik]

Essentially, it is not a tax on property but a tax imposed on the privilege of transmitting property upon the death of the owner.

I don't agree with the above statement. You can't take anything with you when you die. It's only natural that the property of the deceased go to his heirs. But the government says that's a privilege. What? So when a person dies who owns his stuff? The government? Then the government kindly sells the stuff to the heirs for a fee? We already pay taxes all our lives for everything we earn and everything we buy. So when we die, all our stuff belongs to the government? Do we still live in medieval times when serfs belonged to their feudal lords? Aren't these enlightened times where humans have personal rights and dignity? Does government serve at the pleasure of the people, or do the people serve at the pleasure of the government? Which one is democracy and which is tyranny..

[Mr Lee]

Essentially, it is not a tax on property but a tax imposed on the privilege of transmitting property upon the death of the owner.

I don't agree with the above statement. You can't take anything with you when you die. It's only natural that the property of the deceased go to his heirs. But the government says that's a privilege. What? So when a person dies who owns his stuff? The government? Then the government kindly sells the stuff to the heirs for a fee? We already pay taxes all our lives for everything we earn and everything we buy. So when we die, all our stuff belongs to the government? Do we still live in medieval times when serfs belonged to their feudal lords? Aren't these enlightened times where humans have personal rights and dignity? Does government serve at the pleasure of the people, or do the people serve at the pleasure of the government? Which one is democracy and which is tyranny..

I have to agree with you Mike, estate tax is one of the most unfair taxes of all when given to a relative but possibly when passed on to a stranger or just friend it might be considered fair IMO because then they would be getting the benefit of something their family did not work for and pay for and pay taxes on, both on the money that was earned to pay for it and the cost to upkeep it. I basically posted that for people who may not have their names on the deeds along with their wives because they would then really get screwed by having to buy the property again should their wife pass before them and then paying would really be unfair.In the US, many families have no choice but to end up selling part or all of ranches or large estates passed on to them because of the taxes due and that is really unfair to lose something that has been in a family for generations, but there is nothing fair about government in the first place and I doubt anything will change in our life times. What really confuses me is that many of the people who make these laws are rich also but they find loop hole laws to get around it all, while those of us who cannot afford the best of lawyers get screwed. Heck maybe their lawyers write the laws with specific loop holes in them just for them.