Article 39p. 39

NATIONAL INTERNAL REVENUE CODE TAXATION, TARIFF and CUSTOMS LAWS

than five (5) 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

donor's tax, or estate tax imposed under this Title

was 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 (5) in

respect

of

the

property

or

properties

given in

exchange therefor. Where a deduction was allowed

of any mortgage or other lien in determining the

donor's tax, or the estate tax of the prior decedent,

which was paid in whole or in part prior to the

decedent's death, then the deduction allowable

under said Subsection 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

allowed

as

deductions

under

paragraphs (2), (3), (4), and (6) of this Subsection as

the

amount

otherwise

deductible

under

said

paragraph (5) 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.

( 6) Transfers for Public Use. — The amount of all

bequests, legacies, devises 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.

(7) The Family Home. — An amount equivalent to

the current fair market value of the decedent's

family home: Provided, however, That if the said

current fair market value exceeds Ten million pesos

(P10,000,000), the excess shall be subject to estate

tax.

(8) Amount Received by Heirs under Republic Act

No. 4917. — Any amount received by the heirs from

the decedent's employee as a consequence of the

death of the decedent-employee in accordance with

Republic Act No. 4917: Provided, That such amount is

included in the gross estate of the decedent.

(as amended by RA No 10963)

(B) Deductions Allowed to Nonresident Estates. - In the

case of a nonresident not a citizen of the Philippines, by

deducting from the value of that part of his gross estate

which

at

the

time

of

his death is situated in the

Philippines:

(1) Standard Deduction. - An amount equivalent to

Five

hundred

thousand

pesos

(P500,000); (as

amended by RA No 10963)

(2) That proportion of the deductions specified in

paragraphs (2), (3), and (4) of Subsection (A) of this

Section which the value of such part bears to the

value of his entire gross estate wherever situated; (as

amended by RA No 10963)

(3) Property Previously Taxed. - An amount equal

to the value specified below of any property forming

part of the gross estate situated in the Philippines of

any person who died within five (5) years prior to the

death

of

the

decedent,

or

transferred

to

the

decedent by gift within five (5) 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 percent (100%) of the value if the prior

decedent died within one (1) 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

percent

(80%) of the value, if the prior

decedent died more than one (1) year but not more

than two (2) 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 percent (60%) of the value, if the prior decedent

died more than two (2) years but not more than

three (3) 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

percent

(40%)

of

the

value,

if

the

prior

decedent died more than three (3) years but not

more than four (4) 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 percent (20%) of the value, if the prior

decedent died more than four (4) years but not

more than five (5) 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

donor's tax, or estate tax imposed under this Title is

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 that part of

the decedent's gross estate which at the time of his

death is situated in the Philippines; and only if, in

determining the value of the net estate of the prior

decedent,

no

deduction

is

allowable

under

paragraph (2) of Subsection (B) of this Section, 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

donor's tax, or the estate tax of the prior decedent,

which was 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

allowed

as

deductions

under

paragraphs (1) and (3) of this Subsection as the

amount otherwise deductible under paragraph (2)

bears to the value of that part of the decedent's

gross estate which at the time of his death is

situated in the Philippines. Where the property

referred to consists of two (2) or more items, the

aggregate value of such items shall be used for the

purpose of computing the deduction.

(4) Transfers for Public Use. - The amount of all

bequests, legacies, devises 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.

(C) Share in the Conjugal Property. - The net share of the

surviving spouse in the conjugal partnership property as

diminished by the obligations properly chargeable to

such property shall, for the purpose of this Section, be

deducted

from

the

net

estate

of

the

decedent. (as

amended by RA No 10963)

(D) Miscellaneous Provisions. - No deduction shall be

allowed in the case of a nonresident not a citizen of the

Philippines, unless the executor, administrator, or anyone

of the heirs, as the case may be, includes in the return

required to be filed under Section 90 the value at the

time of his death of that part of the gross estate of the

nonresident not situated in the Philippines.

© Compiled by RGL

39 of 201