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DOF targets P50 B/yr from estate taxes

By Zinnia B. Dela Peña (The Philippine Star) | Updated January 31, 2013 - 12:00am
MANILA, Philippines - The Department of Finance wants to increase estate tax collection to P50 billion annually given a buoyant property market and record low interest rates which have jacked up property values.
In a briefing yesterday, Finance Secretary said the agency is closely working with the Bureau of Internal Revenue and sees the need to revisit the estate tax to increase government revenues.
The estate tax is defined by the BIR as the tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs and beneficiaries at the time of death. It is not a property tax but a tax levied on the privilege of transferring property upon the death of the owner.
Purisima said it was an ambitious target considering that collections from estate taxes amount to  only P850 million to P1 billion.
“If you analyze estate taxes collected by the government, it’s always around P850 million to P1 billion. Over the past many years, asset prices have increased just from that you would expect estate taxes should increase. Our long-term goal is to bring that number up to about P50 billion annually.  We will closely monitor with the BIR and its offices to try to meet this target,” Purisima said.
“This is an ambitious target.  It’s a big jump. We don’t expect that to happen overnight.  But we will closely monitor this number.  If we success that’s another 0.5 percent of GDP (gross domestic product),” Purisima said when asked about the timetable for the plan.
The estate tax accounts for less than one percent of the BIR’s total revenues.
The executor or administrator or any of the legal heirs of the decedent is required to file the estate tax return where through exempt from estate tax, the gross value of the estate exceeds P200,000 and where regardless of the gross value, the estate consists of registrable property, motor vehicle, share of stocks or other similar property for a clearance from the BIR is required as a condition precedent for the transfer of ownership.
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