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1st Semester Transfer Taxation Module 2 Estate Taxation - Summary of Concept Maps
1st Semester Transfer Taxation Module 2 Estate Taxation - Summary of Concept Maps
DISCLAIMER: Kindly note that no part of this Module may be reproduced in any form or any means without
the permission (e.g., written or oral) from the Instructor.
MODULE NO. 02
ESTATE TAXATION – CONCEPT MAP
CONCEPT MAP 1:
TYPE OF TRANSACTIONS
TRANSACTIONS
Unilateral transfers involve the Complex transfers are transfers for less
This involves the transmission of
transmission of property by a person than full and adequate consideration.
property for a consideration. They are
without consideration. They are These are sales made at prices which
referred to as onerous transactions or
commonly referred to as, gratuitous are significantly lower than the fair value
exchanges.
transactions or simply, transfers. of the property sold.
CONCEPT MAP 2:
CLASSIFICATION OF INDIVIDUALS
INDIVIDUAL TAXPAYERS
CITIZEN CITIZEN
NON-RESIDENT NON-RESIDENT
RESIDENT ALIEN
CITIZEN ALIEN
RESIDENT CITIZEN (Section 22G of the Tax
(Section 22E of the Tax (Section 22F of the Tax
Code, as amended)
Code, as amended) Code, as amended)
Taxable on properties
Taxable on properties located within and outside the Philippines located within the
Philippines
FOCUS NOTE!
Citizens of Philippines (Legal Basis: 1987 Philippine Constitution):
• Those who are citizens of the Philippines at the time of the adoption of the Constitution (on February 2, 1987)
• Those whose fathers or mothers are citizens of the Philippines
• Those born before January 17, 1973 of Filipino mothers who elect Philippine citizenship upon reaching the age of majority
• Those who are naturalized in accordance with law
Aliens:
• Individuals who are not Filipino Citizens.
o Resident Alien (Section 22F of the Tax Code, as amended);
o Non - Resident Alien engaged in trade or business in the Philippines (Section 22G and Section 25A of the Tax
Code, as amended);
o Non-resident alien not engaged in trade or business in the Philippines (Section 22G and Section 25B of the Tax
Code, as amended).
NON-RESIDENT CITIZEN (NRC) (Legal Basis: Section 22E of the Tax Code, as amended)
• A citizen of the Philippines who establishes to the satisfaction of the Commissioner the fact of his physical presence abroad
with a definite intention to reside therein;
• A citizen of the Philippines who leaves the Philippines during the taxable year to reside abroad, either as an immigrant or
for employment on a permanent basis;
• A citizen of the Philippines who works and derives income from abroad and whose employment thereat requires him to be
physically present abroad most of the time during the taxable year; and
o Overseas Contract Workers – OCW is not synonymous with OFW. If an OFW has a contract, he is an OCW
o Seaman – Requisites:
▪ Member of Complement; and
▪ Vessel is engaged in International Shipping
• A citizen who has been previously considered as non-resident citizen and who arrives in the Philippines at any time during
the taxable year to reside permanently in the Philippines shall likewise be treated as a non-resident citizen for the taxable
year in which he arrives in the Philippines with respect to his income derived from sources abroad until the date of his arrival
in the Philippines.
• FOCUS NOTE! The taxpayer shall submit proof to the Commissioner of Internal Revenue (CIR) to show his intention of
leaving the Philippines to reside permanently abroad or to return to and reside in the Philippines as the case may be.
• EXAMPLES:
o A Resident Citizen who would go abroad with a two-year working visa. The change in status starts upon his
departure from the Philippines; and
o A Citizen staying abroad for a period of at least 183 days.
CONCEPT MAP 3:
RESIDENT CITIZEN, NON-RESIDENT CITIZEN, AND RESIDENT ALIEN TAXABILITY
FOCUS NOTE:
1. PROPERTY - Real Properties, and Personal Properties (e.g., Tangible and Intangible)
2. TAXABILITY - Taxable on properties located within and outside the Philippines
3. RECIPROCITY - Rule on Reciprocity for Intangible Personal Properties does not apply.
TANGIBLE INTANGIBLE
TAXABLE
CONCEPT MAP 4:
NON-RESIDENT ALIEN TAXABILITY
FOCUS NOTE:
1. PROPERTY - Real Properties, and Personal Properties (e.g., Tangible and Intangible)
2. TAXABILITY - Taxable on properties located within and outside the Philippines
3. RECIPROCITY - Rule on Reciprocity for Intangible Personal Properties applies.
4. ADDITIONAL - Rule on ‘Properties Outside Considered Inside PH’ applies.
NRA
TANGIBLE INTANGIBLE
Rule on ‘Properties
Outside Considered
Inside PH’
Y N
Rule on Reciprocity
for Intangible
Personal Properties
Y N
CONCEPT MAP 5:
RULE ON ‘PROPERTIES OUTSIDE CONSIDERED INSIDE PH’
PARTNERSHIP CORPORATION
DOMESTIC FOREIGN
CONCEPT MAP 6:
SITUS: DIVIDEND INCOME
DIVIDEND INCOME
RESIDENT NON-RESIDENT
Based on the ratio of the gross income of the foreign corporation for the preceding 3
years prior to declaration of dividends derived from Philippine sources.
CONCEPT MAP 7:
VALUATION OF GROSS ESTATE: SHARES OF STOCKS
SHARES OF STOCKS
LISTED UNLISTED
CONCEPT MAP 8:
INCLUSION TO GROSS INCOME: LIFE INSURANCE
FOCUS NOTE:
1. FUND - Source of Funds
2. BENEFICIARY - Beneficiary (e.g., Estate, Administrator, Executor, or Other Parties)
3. REVOCABILITY - Revocability of Insurance (e.g., Revocable or Irrevocable)
LIFE INSURANCE
ESTATE,
ADMINISTRATOR, or OTHER PARTIES
EXECUTOR
Y N Y N
-NOTHING FOLLOWS-