How inheritance tax works in Philippines
The Philippines does not impose a separate inheritance tax on each heir. It imposes a 6% estate tax on the net taxable estate transferred at death. The estate, executor or administrator must settle the tax and obtain the documentation needed to transfer registered assets.
For a citizen or resident decedent, the gross estate generally includes property wherever situated, subject to the applicable deductions and exclusions. For a non-resident non-citizen, the Philippine estate generally focuses on property situated in the Philippines, with treaty and reciprocity rules potentially relevant.
A PHP 5 million standard deduction is generally available, and qualifying deductions can also include the family home and the surviving spouse's share. The correct valuation of land, buildings, shares, bank accounts and other assets is often as important as the 6% rate.
Lifetime gifts are covered by donor tax rather than estate tax. Donor tax is generally 6% of total gifts above PHP 250,000 made during the calendar year, subject to exemptions for qualifying donations and the rules on the property transferred.
Tax rates at a glance
- Estate tax
- 6%Net taxable estate
- Standard estate deduction
- PHP 5 million
- Donor tax
- 6%
- Annual exempt gifts
- PHP 250,000
- Family-home deduction
- Up to PHP 10 million
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
FamiliesProperty ownersFoundersForeign heirsHigh-net-worth estates
Watch out for
- The 6% estate tax is applied to the net taxable estate, not automatically to the value of every asset without deductions. The estate still needs records, valuations, death certificates and transfer documents.
- A Philippine citizen's worldwide estate can be relevant even when some assets are held abroad. A non-resident non-citizen's estate is generally limited to Philippine-situs property, subject to the detailed Tax Code and treaty rules.
- Donor tax and estate tax are different events. A gift during life can trigger 6% donor tax above the annual exemption, while retaining property until death can bring the transfer into the estate-tax rules.
- Property transfers also commonly involve documentary stamp tax, registration and local transfer taxes. Paying estate tax does not by itself complete the legal transfer of title.
Frequently asked questions
Does the Philippines have inheritance tax?
The Philippines uses a 6% estate tax on the net taxable estate rather than a separate tax calculated on each heir's inheritance.
What is the Philippine estate-tax deduction?
A standard deduction of PHP 5 million generally applies, with other deductions potentially available, including the qualifying family home and the surviving spouse's share.
Does the Philippines tax gifts?
Yes. Donor tax is generally 6% of total gifts above PHP 250,000 made during the calendar year, subject to statutory exemptions and documentation.