Estate Tax Philippines: 6% Rate, Deductions, and Filing

The estate tax in the Philippines is a flat 6% of the net estate — the value of everything the decedent owned at death, minus allowable deductions. The rate has been fixed since the TRAIN Law took effect in 2018, replacing the older graduated scale. Because every citizen or resident estate gets a PHP 5 million standard deduction with no paperwork required to claim it, a lot of modest estates end up with nothing to pay. The return is still due within one year of death, and heirs cannot transfer titles to real property, vehicles, or shares until the BIR issues clearance.

What Goes Into the Gross Estate

The gross estate is the starting figure. For Filipino citizens and resident aliens, it covers all property worldwide. Non-resident aliens are taxed only on property physically located in the Philippines.

Typical assets include land and buildings, vehicles, jewelry, bank deposits, and shares of stock. Valuation follows BIR rules rather than whatever the family thinks the property is worth:

Real property is valued at the higher of the BIR zonal value or the local assessor’s assessed value.
Shares listed on the Philippine Stock Exchange use the closing price on the date of death.
Unlisted common shares use book value from the latest financial statements; unlisted preferred shares use par value.

Deductions That Reduce the Taxable Estate

Most of the tax planning happens here.

Standard Deduction

Every estate of a citizen or resident gets a flat PHP 5 million standard deduction with no supporting documents required. Non-resident alien decedents get PHP 500,000. If the gross estate is PHP 5 million or less and the decedent was a citizen or resident, this deduction alone wipes out the taxable base.¹

Family Home

The decedent’s family home is deductible at fair market value up to PHP 10 million. Anything above that cap is not deductible. The decedent or the family must have actually lived in the home at the time of death, and the BIR generally expects a barangay certification confirming residency.¹

Vanishing Deduction

If the decedent inherited or received property by gift within five years before death, and that transfer was already taxed, the estate can claim a vanishing deduction to prevent double taxation. The deductible percentage shrinks over time:

Within 1 year before death: 100%
Over 1 year but within 2: 80%
Over 2 but within 3: 60%
Over 3 but within 4: 40%
Over 4 but within 5: 20%

After five years, the deduction is gone.²

Other Allowable Deductions

Claims against the estate by creditors, unpaid mortgages on estate property, and transfers to the Philippine government for exclusively public purposes are all deductible. So are casualty losses from fire, storms, or theft, provided insurance did not cover them and the loss happened before the estate tax filing deadline.

One item catches families off guard: funeral expenses, judicial expenses, and medical expenses are no longer deductible under the TRAIN Law. Older guides still list them, which is why heirs sometimes overclaim.³

How the 6% Is Calculated

Subtract allowable deductions from the gross estate. Multiply the result by 6%. That’s the tax.

A worked example. Suppose the decedent left real property worth PHP 8 million, PHP 3 million in bank deposits, and a PHP 1 million vehicle, for a gross estate of PHP 12 million. Deductions include the PHP 5 million standard deduction, a PHP 4 million family home (below the cap), and PHP 500,000 in outstanding debts. Deductions total PHP 9.5 million. The net taxable estate is PHP 2.5 million, and the tax due is PHP 150,000.¹

Filing the Return

The executor, administrator, or any legal heir files BIR Form No. 1801 within one year of the decedent’s death. The BIR Commissioner may grant an extension of up to 30 days in meritorious cases, but the request has to be made before the original deadline lapses.⁴

If the gross estate exceeds PHP 5 million, the return must be accompanied by a statement from a Certified Public Accountant itemizing the assets, deductions claimed, and tax due. For deaths before January 1, 2018, the CPA threshold was PHP 2 million.⁴

Payment is due when the return is filed, through an authorized agent bank or the Revenue District Office where the decedent was registered. Before filing, the estate itself has to register for a Tax Identification Number using BIR Form No. 1904.

What Happens If You File Late

Late filing is expensive, and the penalties are why so many Philippine estates sit unsettled for years:

A 25% surcharge on the unpaid estate tax for failure to file or pay on time.
20% annual interest on the unpaid balance, running from the original due date until payment.
A compromise penalty on top, scaled to the amount owed — from PHP 1,000 for tax under PHP 5,000, up to PHP 50,000 for tax above PHP 5 million.

On a PHP 500,000 tax that goes unpaid for three years, the 25% surcharge adds PHP 125,000 and the 20% interest adds roughly PHP 300,000. The bill nearly doubles. The BIR does not waive these easily.⁵

Paying in Installments

When the estate is asset-rich but cash-poor at filing, there are two ways to stretch the payment out.

The first is a cash installment plan. File the return on time, indicate the schedule (monthly, quarterly, semi-annually, or annually), and complete payment within two years from the filing date. If the BIR approves the plan, no penalties or interest accrue during that period. Miss the two-year finish line and penalties and interest are computed back to the original due date on whatever remains.¹

The second is a hardship extension. If the Commissioner finds that immediate payment would cause undue hardship, the deadline can stretch up to five years for estates settled through the courts, or two years for estates settled extrajudicially. Commissioner approval is required, and the standard for undue hardship is a real one.¹

Getting Property Into the Heirs’ Names

Paying the tax is not the end of the story. To transfer titles on real property, vehicles, shares, or other registrable assets, the heirs need an electronic Certificate Authorizing Registration (eCAR) from the BIR. The Registry of Deeds, LTO, and banks will not move ownership without it.

To get the eCAR, submit the following to the Revenue District Office:

The filed estate tax return with proof of payment (official receipt or validated deposit slip).
The approved ONETT Computation Sheet from the BIR.
The transfer document, typically an extrajudicial settlement deed or a court order partitioning the estate.
Certification fee and documentary stamp tax payment.
A Special Power of Attorney if someone other than the heirs is handling the filing.

Processing takes several weeks and varies by district. Incomplete documents are the usual reason for delay.⁶

Bank Accounts

Bank accounts have a separate rule. Heirs may withdraw from a decedent’s bank account within one year of death without a full eCAR, provided the estate has been registered with the BIR and the heirs present the estate’s TIN along with BIR Form No. 1904 stamped by the Revenue District Office. The bank deducts a 6% final withholding tax on the withdrawal. After the one-year window closes, banks typically freeze the account until the estate tax is fully settled and an eCAR is issued.

The Estate Tax Amnesty Has Closed

The amnesty under Republic Act No. 11956, which let heirs of decedents who died on or before May 31, 2022 settle at the flat 6% without surcharges, interest, or compromise penalties, expired on June 14, 2025.⁷ If your family missed the deadline, the ordinary penalties above apply in full. Congress has extended amnesty programs before, but as of 2026 no new extension has been enacted. Anyone still holding an unsettled pre-2022 estate should talk to a tax professional about current options rather than wait for legislation that may never come.⁸

Non-Resident Decedents

Non-resident aliens are taxed only on property located in the Philippines. Their standard deduction is PHP 500,000 rather than PHP 5 million, and other deductions are generally prorated based on the share of Philippine-situs property relative to the worldwide estate. Where the decedent’s home country also taxes the same property, a reciprocity provision under Philippine law may reduce the local tax depending on the treaty. U.S. citizens or residents who own Philippine property will owe Philippine estate tax on those assets; the U.S. allows a credit for foreign death taxes paid, claimed on IRS Form 706-CE.⁹

1
Bureau of Internal Revenue. Revenue Regulations No. 12-2018 – Consolidated Revenue Regulations on Estate Tax and Donors Tax
2
Supreme Court E-Library. Republic Act No. 7499
3
Lawphil. Republic Act No. 10963 – Tax Reform for Acceleration and Inclusion
4
Bureau of Internal Revenue. Guidelines and Instructions for BIR Form No. 1801
5
Bureau of Internal Revenue. Penalties for Late Filing of Tax Returns
6
Bureau of Internal Revenue. Processing and Issuance of Electronic Certificate Authorizing Registration for Sale, Donation, or Estate
7
Lawphil. Republic Act No. 11956
8
Bureau of Internal Revenue. Estate Tax Amnesty Flyer
9
Internal Revenue Service. About Form 706-CE, Certification of Payment of Foreign Death Tax