REPUBLIC ACT NO. 7499 - AN ACT
RESTRUCTURING THE ESTATE AND DONOR'S TAXES, AMENDING FOR THE PURPOSE
SECTIONS 77, 79(a), 83(b) AND 92 (a) AND (b) ON TRANSFER TAXES OF THE
NATIONAL INTERNAL REVENUE CODE, AS AMENDED
Section 1. Sec. 77 of the National Internal Revenue Code,
as amended, is hereby further amended to read as follows:
"Sec. 77. Rates of estate tax. — There shall be
levied, assessed, collected, and paid upon the transfer of the net
estate as determined in accordance with Sec. 78 and 79 of every
decedent, whether resident or nonresident of the Philippines, a tax
based on the value of such net estate, as computed in accordance with
the following schedules:
"If the net estate is:
"Over But Not The
Tax Plus Of Excess
Over Shall be
Over
— P200,000
Exempt — —
P200,000 500,000
5% — P200,000
500,000
2,000,000 P15,000
8% 500,000
2,000,000
5,000,000 135,000
12% 2,000,000
5,000,000
10,000,000 495,000
21% 5,000,000
10,000,000 And
Over 1,545,000
35% 10,000,000"
Sec. 2. Sec. 79(a) of the National Internal
Revenue Code, as amended, is hereby further amended to read as follows:
"(a) In the case of a citizen or resident of the
Philippines, by deducting from the value of the gross estate.
"(1) Expenses, losses, indebtedness, and taxes. —
Such amounts —
"(A) For actual funeral expenses or in an amount
equal to five per centum of the gross estate, whichever is lower, but
in no case to exceed P100,000;
"(B) For judicial expenses of the testamentary or
intestate proceedings;
"(C) For claims against the estate: provided, that at
the time the indebtedness was incurred the debt instrument was duly
notarized and, if the loan was contracted within three years before the
death of the decedent, the administrator or executor shall submit a
statement showing the disposition of the proceeds of the loan;
"(D) For claims of the deceased against insolvent
persons where the value of decedent's interest therein is included in
the value of the gross estate; and
"(E) For unpaid mortgages upon, or any indebtedness
in respect to property, where the value of decedent's interest therein,
undiminished by such mortgage or indebtedness, is included in the value
of the gross estate, but not including any income taxes upon income
received after the death of the decedent, or property taxes not accrued
before his death, or any estate tax. The deduction herein allowed in
the case of claims against the estate unpaid mortgages, or any
indebtedness, shall when founded upon a promise or agreement, be
limited to the extent that they were contracted bona fide and for an
adequate and full consideration in money or money's worth. There shall
also be deducted losses incurred during the settlement of the estate
arising from fires, storms, shipwreck, or other casualties, or from
robbery, theft, or embezzlement, when such losses are not compensated
for by insurance or otherwise, and if at the time of the filing of the
return such losses have not been claimed as a deduction for income tax
purposes in an income tax return, and provided that such losses were
incurred not later than the last day for the payment of the estate tax
as prescribed in subsection (a) of Sec. 84.
"(2) Property previously taxed. — An amount equal to
the value specified below of any property forming a part of the gross
estate situated in the Philippines of any person who died within five
years prior to the death of the decedent, or transferred to the
decedent by gift within five years prior to his death, where such
property can be identified as having been received by the decedent from
the donor by gift, or from such prior decedent by gift, bequest,
devise, or inheritance, or which can be identified as having been
acquired in exchange for property so received:
"One hundred per centum of the value if the prior decedent died within
one year prior to the death of the decedent, or if the property was
transferred to him by gift within the same period prior to his death;
"Eighty per centum of the value if the prior decedent died more than
one year but not more than two years prior to the death of the
decedent, or if the property was transferred to him by gift within the
same period prior to his death;
"Sixty per centum of the value if the prior decedent died more than two
years but not more than three years prior to the death of the decedent,
or if the property was transferred to him by gift within the same
period prior to his death;
"Forty per centum of the value if the prior decedent died more than
three years but not more than four years prior to the death of the
decedent, or if the property was transferred to him by gift within the
same period prior to his death; and
"Twenty per centum of the value if the prior decedent died more than
four years but not more than five years prior to the death of the
decedent, or if the property was transferred to him by gift within the
same period prior to his death.
"These deductions shall be allowed only where a gift tax, or estates
tax imposed under this Title were finally determined and paid by or on
behalf of such donor, or the estate of such prior decedent, as the case
may be and only in the amount finally determined as the value of such
property in determining the value of the gift, or, the gross estate of
such prior decedent, and only to the extent that the value of such
property is included in the decedent's gross estate, and only if in
determining the value of the estate of the prior decedent no deduction
was allowable under paragraph (2) in respect of the property or
properties given in exchange therefore. Where a deduction was allowed
of any mortgage or other lien in determining the gift tax, or the
estate tax of the prior decedent, which were paid in whole or in part
prior to the decedent's death then the deduction allowable under said
paragraph shall be reduced by the amount so paid. Such deduction
allowable shall be reduced by an amount which bears the same ratio to
the amounts allowable as deductions under paragraphs (1) and (3) of
this subsection as the amount otherwise deductible under said paragraph
(2) bears to the value of the decedent's estate. where the property
referred to consists of two or more items the aggregate value of such
items shall be used for the purpose of computing the deduction.
"(3) Transfers for public use. — The amount of all
bequests, legacies, devices, or transfers to or for the use of the
Government of the Republic of the Philippines, or any political
subdivision thereof, for exclusively public purposes.
"(4) The family home. — An amount equivalent to the
current or fair market value or zonal value of the decedent's family
home, whichever is higher: provided, however, that, if the said current
or fair market value or zonal value exceeds One million pesos
(P1,000,000), the excess shall be subject to estate tax. As a sine qua
non condition for the exemption or deduction, said family home must
have been the decedent's family home as certified by the barangay
captain of the locality."
Sec. 3. Sec. 83(b) of the National Internal
Revenue Code, as amended, is hereby further amended to read as
follows:
"(b) Time for filing. — For the purpose of
determining the estate tax provided for in Sec. 77 of this Code, the
estate tax return required under the preceding subsection (a) shall be
filed within six months from the decedent's death.
"A certified copy of the schedule of partition and the order of the
court approving the same shall be furnished the Commissioner within
thirty days after the promulgation of such order."
Sec. 4. Sec. 92(a) and (b) of the National
Internal Revenue Code, as amended, is hereby further amended to read as
follows:
"Sec. 92 Rates of tax payable by donor. — (a) In
general. — The tax for each calendar year shall be computed on the
basis of the total net gifts made during the calendar year in
accordance with the following schedule:
"If the net gift is:
"Over But Not The
Tax Plus Of Excess
Over Shall be
Over
— P50,000
Exempt — —
P50,000 100,000
1.5% — P50,000
100,000 200,000
P750 3% 100,000
200,000 500,000
3,750 5% 200,000
500,000
1,000,000 18,750
8% 500,000
1,000,000
3,000,000 58,750
10% 1,000,000
3,000,000
5,000,000 285,750
15% 3,000,000
5,000,000 —
558,750 20% 5,000,000
"(b) Tax payable by donor if donee is a stranger. —
When the donee or beneficiary is a stranger, the tax payable by the
donor shall be ten percent (10%) of the net gifts. For the purpose of
this tax, a stranger is a person who is not a:
"(i) Brother, sister (whether by whole or half
blood), spouse, ancestor, and lineal descendant; or
"(ii) Relative by consanguinity in the collateral
line within the fourth degree of relationship.
"(c) Any contribution in cash or in kind to any
candidate, political party or coalition of parties for campaign
purposes, shall be governed by the Election Code, as amended."
Sec. 5. All laws, decrees, orders, rules,
regulations and other issuances, or parts thereof, inconsistent with
the provisions of this Act are hereby repealed or modified
accordingly.
Sec. 6. This Act shall take effect upon its
approval.
Approved: May 18, 1992
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