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BIR targets higher estate tax collection

By Maria Bernadette Lunas | Posted on July 16, 2012 | 12:01am
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The Bureau of Internal Revenue said it will check payments made by heirs of deceased property owners in a bid to raise estate tax collections.

BIR Commissioner Kim Henares said annual estate tax collection amounted to less than P1 billion, when it was supposedly “substantially higher.”

Estate tax, as defined by the BIR, is filed by the heirs when transmitting property to their name upon the death of the owner. It is not considered a tax on property.

The BIR, under the present tax rates, requires heirs of deceased persons to pay a tax equivalent to 20 percent of the value of the estate of the deceased.

The agency said it was intensifying the campaign to collect estate taxes amid the huge discrepancies between the number of deaths recorded by the National Statistics Office and the number of estate tax returns filed.

Data from the NSO showed there were 441,956 deaths in 2007; 464,581 in 2008; and 480,820 in 2009.

The BIR, however, said there were only 29,198 estate tax returns filed in 2007; 29,863 in 2008; and 26,811 in 2009.

Estate tax revenues amounted to only P649.9 million in 2007; P854.9 million in 2008; and P876.8 million in 2009.

Finance Secretary Cesar Purisima earlier said the government could actually generate “more than a billion from estate taxes in a single year,” adding that in some cases, the amount could go as high as P5 billion for a single family.

The BIR said it would coordinate with the NSO in monitoring deaths aside from other measures to determine estate tax delinquency in order to plug tax loopholes.

The agency discovered that some individuals had attempted to evade payment of corresponding estate tax by transferring properties with no declaration of death of the owner.

“Once the executor or administrator or any of the legal heirs failed to pay in six months, apart from the tax there will be surcharge and interest. And if they did not declare the estate and the BIR find out, they could be imprisoned,” Henares said.

“It’s like taxi meter.  At one point, the heirs might not get anything as their tax liability is equivalent to the property that they will inherit,” Henares said.

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