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Atty. Rodel C. Unciano discusses his insights on the possible LGU's ...

A Call for LGU’s Support on the Government’s

Estate Tax Amnesty Program

By: Atty. Rodel C. Unciano

With the effectivity of Republic Act No. 11956 (RA 11956), which further amended RA 11213 or the “Tax Amnesty Act”, the estate tax amnesty has been expanded to cover the estate of decedents who died on or before May 31, 2022 while the period of availment is now extended up to June 14, 2025.

RA 11956, however, failed to reinstate the original intention of RA 11213 on the one-time imposition of the six percent (6%) tax amnesty rate, which was vetoed by then President Duterte. Thus, the estate tax amnesty rate of six percent (6%) shall remain to be imposed on each decedent’s total net taxable estate at the time of death and at every stage of transfer of property in cognizance with the rules on succession under the Civil Code. While the amnesty on the estate tax is a great relief to the heirs intending to transfer titles on the properties that they have inherited, the imposition of the six percent (6%) rate on every stage of transfer of the property from one decedent to another makes it still burdensome to the concerned heirs.

Further, even with the payment of the six percent (6%) estate tax amnesty, the heirs may still be unable to transfer the estate in their names without the payment of the tax on the transfer of real property ownership as required under the Local Government Code (LGC) of 1991. Note that aside from the national internal revenue tax, which is the estate tax, the LGC of 1991also allows Local Government Units (LGUs), specifically, the provinces and cities where properties are located, to impose tax on sales, donations, barters or on any other modes of transferring ownership or title over real properties at the rate of not more than fifty percent (50%) of one percent (1%) of the total consideration or fair market value of the properties involved in a transfer. And like any other tax, the tax on transfer of ownership over real property is also subject to surcharge and interest due to late payment. The Tax Amnesty Act and its amendments under RA 11569 and RA 11956 failed to extend amnesty on this local transfer tax.

In support of the government’s estate tax amnesty program and to align with the national government’s objective of giving reasonable tax relief to estates with deficiency taxes, the Bureau of Local Government Finance (BLGF) attempted to provide relief to taxpayers by encouraging LGUs to grant relief on surcharges and interest on tax on transfer of real property ownership.

But of course, LGUs cannot grant this relief without a local ordinance duly enacted by the local sanggunian for this purpose. This is pursuant to Section 192 of the LGC of 1991 which allows LGUs to grant reliefs or even tax exemptions to taxpayers under such terms and conditions as the local sanggunian may deem necessary.

Thus, to further encourage concerned taxpayers to avail of the national government’s tax amnesty program, LGUs may enact ordinances granting reliefs on the imposition of surcharges and interests on tax on transfer of real property ownership during the period covered in the estate tax amnesty program. And perhaps, a reduction on the rate of transfer taxes or even exemption, if warranted, would certainly encourage concerned taxpayers to avail the government’s estate tax amnesty program.

Many inherited real properties remain in the name of our ancestors because of the estate tax and increments that should be paid and as part of the requirements in the transfer of titles on properties from the decedent to the heirs. Making the government’s estate tax amnesty program more generous and less cumbersome to avail is a must for it to be successful. To give more meaning to this amnesty, LGUs should follow by providing similar amnesties. This will allow properties located in their respective jurisdictions to be transferred in the names of their current owners.