BIR eyes more taxes from heirs of the dead

MANILA, Philippines - As Filipinos remember their departed loved ones, the taxman is watching.

The Bureau of Internal Revenue (BIR), under pressure to increase its collections, is aiming to collect more taxes from heirs of people who die, particularly the rich.

BIR Commissioner Kim Henares has told a congressional hearing that her agency is targeting families of the dead for more estate and donor’s taxes.

She said they are monitoring people who die through the National Statistics Office (NSO) and the obituary and society pages of newspapers.

She said the BIR has arranged for the NSO to report to it people who file death certificates.

“We want to collect the correct amount of estate taxes because sometimes, people just pass on the properties to their heirs without the payment of taxes,” she added.

She said the law requires the payment of estate taxes before assets are distributed.

Henares said that if the properties are passed on to the heirs and the latter do not have sufficient income to acquire them, such properties would be considered as donated assets and subject to donor’s tax.

Under the National Internal Revenue Code, the family of a person who has died has to file an estate tax return and pay an estate tax based on the value of the dead person’s assets.

If the value is P200,000 or less, the estate is tax-exempt. The tax is five percent of the excess over P200,000 if the value is P200,000 to P500,000; P15,000 plus eight percent of the excess over P500,000 if it is P500,000 to P2 million; and P135,000 plus 11 percent of the excess over P2 million if the value is P2 million to P5 million.

If the properties are worth P5 million to P10 million, the tax is P465,000 plus 15 percent of the excess over P5 million, and P1.215 million plus 20 percent of the excess over P10 million if the estate is valued at more than P10 million.

Donor’s tax rates are similarly structured. There is no tax if the donated asset is P100,000 or less.

The tax starts at two percent of the excess over P100,000 if the donation is P100,000 to P200,000; P2,000 plus four percent of the excess if it is P200,000 to P500,000; P14,000 plus six percent of the excess if it is P500,000 to P1 million; and P44,000 plus eight percent of the excess if it is P1 million to P3 million.

If the donated property is worth P3 million to P5 million, the tax is P204,000 plus 10 percent of the amount in excess of P3 million; P404,000 plus 12 percent of the excess if it is P5 million to P10 million; and P1,004,000 plus 15 percent of the excess if it is P10 million or more.

The BIR and the Bureau of Customs (BOC) have been under increasing pressure to collect more taxes to support the national budget.

The BIR has been doing better than the BOC. In his State of the Nation Address last July, President Aquino publicly denounced corruption and inefficiency at the BOC.