REPUBLIC ACT No. 83
An Act to Amend Sections Eighty-Six, Eighty-Nine, One Hundred and Ten, One Hundred and Twelve, One Hundred and Sixteen and One Hundred and Twenty-Two of Title III of Commonwealth Act Numbered Four Hundred and Sixty-Six
Be it enacted by the Senate and House of Representatives of the Philippine Congress Assembled:
Section 1. Section eighty-six of Commonwealth Act Numbered Four hundred and sixty-six is hereby amended to read as follows:
"Sec. 86. Rates of inheritance tax.— In addition to the estate tax imposed by section eighty-five, there shall be levied, assessed, collected and paid an inheritance tax equal to the sum of the following percentages of the value of the individual share of each heir or beneficiary in the net estate, after deducting the amount of the estate tax, of every decedent, whether a resident or non-resident of the Philippines:
"(a) When the surviving spouse, a legitimate, recognized natural, or adopted child, or legitimate descendant, or ascendant, or either of the adopting parents is the beneficiary, or the father or mother who had recognized him as a natural child, and in every case where the beneficiary receives the property exclusively for educational or charitable purposes there shall be collected upon the share which corresponds to each beneficiary in the inventoried property a tax according to the following schedule: Provided, However, That such portion of the share of a surviving spouse or a legitimate, recognized natural, or adopted child, who is a citizen or resident of the Philippines, which is not in excess of three thousand pesos shall be exempt from this tax:
"Two per centum of the amount of the share not in excess of ten thousand pesos;
"Four per centum of the amount by which the share exceeds ten thousand pesos and does not exceed thirty thousand pesos;
"Six per centum of the amount by which the share exceeds thirty thousand pesos and does not exceed fifty thousand pesos;
"Eight per centum of the amount by which the share exceeds fifty thousand pesos and does not exceed seventy thousand pesos;
"Ten per centum of the amount by which the share exceeds seventy thousand pesos and does not exceed one hundred thousand pesos;
"Twelve per centum of the amount by which the share exceeds one hundred thousand pesos and does not exceed one hundred and fifty thousand pesos;
"Fourteen per centum of the amount by which the share exceeds one hundred and fifty thousand pesos and does not exceed two hundred and fifty thousand pesos;
"Fifteen per centum of the amount by which the share exceeds two hundred and fifty thousand pesos and does not exceed five hundred thousand pesos;
"Sixteen per centum of the amount by which the share exceeds five hundred thousand pesos and does not exceed one million pesos; and
"Seventeen per centum of the amount by which the share exceeds one million pesos;
"Where the property is received for educational or charitable purposes, it shall be the duty of the person or persons in charge thereof to submit from time to time a report of the administration and use of the property to the Collector of Internal Revenue and within twenty days after demand therefor has been made by the said Collector.
"(b) When a brother or sister, who is a legitimate or acknowledged natural child of a common father or mother, or both, or the children of such brother or sister, or any descendant mentioned as such in the will and not included in subsection (a) hereof is the beneficiary, there shall be collected the same tax fixed in said subsection with an increase of seventy-five per centum.
"(c) When other relatives within the sixth degree not included in the two next preceding subsections are beneficiaries, there shall be collected upon the share which corresponds to each beneficiary the same tax fixed in subsection (a) with an increase of one hundred and fifty per centum.
"(d) When a relative by affinity within the same degree as those mentioned in subsections (a) and (b), with the exception of the surviving spouse, is the beneficiary, there shall be collected the same tax fixed in subsection (a) with an increase of two hundred and twenty-five per centum.
"(e) When strangers are beneficiaries there shall be collected upon the share which corresponds to each beneficiary the same tax fixed in subsection (a) with an increase of four hundred per centum.
"For the purposes of this tax, strangers are deemed those relatives by consanguinity of the seventh or more remote degree in the collateral line, and all relatives by affinity with the exception of the spouse and those mentioned in subsection (d) of this section: Provided, However, That where the beneficiary is a domestic servant, or a trusted employee, there shall be collected on the first two thousand pesos and five thousand pesos, respectively, the tax fixed in subsection (a) of this section, and on the excess, the tax prescribed in this subsection. In cases of property which by the will of the testator should be divided among the poor, without the designation of any particular persons, or which should be disposed of for masses or other pious works, there shall be collected the tax at the rate fixed in this subsection upon the total amount of said property.
"In case the property is transmitted to the heirs subject to the usufructuary interest, use, or habitation, or annuity of a third person, the tax shall be based on the value of the inventoried property less than that of the usufruct, use or habitation, or annuity determined as hereinafter provided."
Section 2. Paragraph (4) of subsection (a) of section eighty-nine of Commonwealth Act Numbered Four hundred and sixty-six is hereby repealed.
Section 3. Section one hundred and ten of Commonwealth Act Numbered Four hundred and sixty-six is hereby amended to read as follows:
"Sec. 110. Rates of tax payable by donee.— In addition to the gift tax imposed under the preceding section, there shall be levied a tax in the amount equal to the excess of a tax, computed in accordance with the rate schedule hereinafter set forth, on the aggregate sum of the net gifts received by each donee for such calendar year and for each of the preceding calendar years, over a tax, computed in accordance with the rate schedule, on the aggregate sum of the net gifts for each of the preceding calendar years received by each donee.
"Rate Schedule
"(a) When the donee or beneficiary is a spouse, a legitimate, recognized natural or adopted child, or a legitimate descendant or ascendant, or either of the adopting parents of the donor, or the father or mother who had recognized such donor, as a natural child, and in every case where the donee receives the property exclusively for educational or charitable purposes, there shall be collected from the donee upon the gifts received by him a tax equal to the sum of the following: Provided, However, That such portion of the gifts in favor of a spouse or a legitimate, recognized natural, or adopted child, who is a citizen or resident of the Philippines, which is not in excess of three thousand pesos shall be exempt from this tax:
"One per centum upon the first ten thousand pesos;
"Two per centum of the amount by which the net gifts exceed ten thousand pesos and do not exceed thirty thousand pesos;
"Three per centum of the amount by which the net gifts exceed thirty thousand pesos and do not exceed fifty thousand pesos;
"Four per centum of the amount by which the net gifts exceed fifty thousand pesos and do not exceed seventy thousand pesos;
"Five per centum of the amount by which the net gifts exceed seventy thousand pesos and do not exceed one hundred thousand pesos;
"Six per centum of the amount by which the net gifts exceed one hundred thousand pesos and do not exceed one hundred and fifty thousand pesos;
"Seven per centum of the amount by which the net gifts exceed one hundred and fifty thousand pesos and do not exceed two hundred and fifty thousand pesos;
"Seven and one-half per centum of the amount by which the net gifts exceed two hundred and fifty thousand pesos and do not exceed five hundred thousand pesos;
"Eight per centum of the amount by which the net gifts exceed five hundred thousand pesos and do not exceed one million pesos; and
"Eight and one-half per centum of the amount by which the net gifts exceed one million pesos.
"Where the property is received for educational or charitable purposes, it shall be the duty of the person or persons in charge thereof to submit from time to time a report of the administration and use of the property to the Collector of Internal Revenue and within twenty days after demand therefor has been made by the said Collector.
"(b) When the donee or beneficiary is a brother or sister who is a legitimate or acknowledged natural child of a common father or mother, or both, of the donor, or the children of such brother or sister, or any descendant mentioned as such in the deed and not included in subsection (a) hereof, there shall be collected the same tax fixed in said subsection with an increase of seventy-five per centum.
"(c) When the donee or beneficiary is a relative within the sixth degree and not included in subsection (a) and (b), there shall be collected the same tax fixed in subsection (a) with an increase of one hundred and fifty per centum.
"(d) When the donee or beneficiary is a relative by affinity within the same degree as those mentioned in subsections (a) and (b), with the exception of the spouse, there shall be collected the same tax fixed in subsection (a) with an increase of two hundred and twenty-five per centum.
"(e) When the donee or beneficiary is a stranger, there shall be collected the same tax fixed in subsection (a) with an increase of four hundred per centum.1â#x0448;phi1
"For the purpose of this tax, strangers are deemed those relatives by consanguinity of the seventh or more remote degree in the collateral line, and all relatives by affinity not included in subsections (a) and (d): Provided, However, That where the beneficiary is a domestic servant or a trusted employee, there shall be collected on the first two thousand pesos and five thousand pesos, respectively, the tax fixed in subsection (a) of this section and, on the excess, the tax prescribed in this subsection. In cases of property which by the desire of the donor should be divided among the poor, without the designation of any particular persons, or which should be disposed of for masses or other pious works, there shall be collected from the donee the tax at the rate fixed in this subsection upon the total aggregate amount of such gifts.
"In case the property donated is subject to the usufructuary interest, use or habitation or annuity of a third person, the tax shall be based on the value of the net gifts less that of the usufruct, use or habitation or annuity determined in accordance with the provisions of section ninety-one."
Section 4. Section one hundred and twelve of Commonwealth Act Numbered Four hundred and sixty-six is hereby amended to read as follows:
"Sec. 1121. Exemption of certain gifts.— The following gifts or donations shall be exempt from the tax provided for in this Chapter.
"(a) In the case of gifts by a resident:
"(1) Dowries or gifts made on account of marriage and before its celebration or within one year thereafter by parents to each of their legitimate, recognized natural, or adopted children to the extent of the first ten thousand pesos.
"(2) Gifts made in favor of persons other than the spouse and the legitimate, recognized natural, or adopted children to the extent of the first one thousand pesos a year, or five per centum of the net income of the donor during the preceding year, whichever is the greater, but in no case shall the amount of exemption allowed under this paragraph exceed five thousand pesos.
"(3) Gifts made to or for the use of the National Government or any entity created by any of its agencies which is not conducted for profit, or to any political subdivision of the said Government.
"(b) In the case of gifts made by a non-resident not a citizen of the Philippines:
"Gifts made to or for the use of the National Government or any entity created by any of its agencies which is not conducted for profit, or to any political subdivision of the said Government."
Section 5. Paragraph (a) of section one hundred and sixteen of Commonwealth Act Numbered Four hundred and sixty-six is hereby amended to read as follows:
"(a) Time of payment of tax.— The gift taxes imposed by sections one hundred and nine and one hundred and ten of this Chapter shall be due and payable on or before the fifteenth day of May following the close of the calendar year and shall be paid by the donor or donee, as the case may be, to the Collector of Internal Revenue or to the treasurer of the province, city or municipality of which the donor or the donee is a resident."
Section 6. Section one hundred and twenty-two of Commonwealth Act Numbered Four hundred and sixty-six is hereby amended to read as follows:
"Sec. 122. Definitions.— For the purposes of this Title, the term "gross estate" and "gift" include real estate and tangible personal property or mixed physically located in the Philippines; franchise which must be exercised in the Philippines; shares, obligations, or bonds issued by any corporation or sociedad anonima organized or constituted in the Philippines in accordance with its laws; shares, obligations, or bonds issued by any foreign corporation eighty-five per centum of the business of which is located in the Philippines; shares, obligations, or bonds issued by any foreign corporation if such shares, obligations, or bonds have acquired a business situs in the Philippines; shares or rights in any partnership; business or industry established in the Philippines; or any personal property, whether tangible or intangible, located in the Philippines: Provided, However, That in the case of a resident, the transmission or transfer of any intangible personal property, regardless of its location, is subject to the taxes prescribed in this Title: And Provided, further, That no tax shall be collected under this Title in respect of intangible personal property (a) if the decedent at the time of his death was a resident of a foreign country which at the time of his death did not impose a transfer tax or death tax of any character in respect of intangible personal property of citizens of the Philippines not residing in that foreign country, or (b) if the laws of the foreign country of which the decedent was a resident at the time of his death allow a similar exemption from transfer taxes or death taxes of every character in respect of intangible personal property owned by citizens of the Philippines not residing in that foreign country.
"The term "deficiency" means (1) the amount by which the taxes imposed by this Chapter exceed the amount shown as the taxes by the donor or donee upon his return; but the amount so shown on the return shall first be increased by the amounts previously assessed (or collected without assessment) as a deficiency, and decreased by the amounts previously abated, refunded, or otherwise repaid in respect of such taxes; or (2) if no amount is shown as the taxes by the donor or donee upon his return, or if no return is made by the donor or donee, then the amount by which the taxes exceed the amounts previously assessed (or collected without assessment) as a deficiency; but such amounts previously assessed, or collected without assessment, shall first be decreased by the amounts previously abated, refunded, or otherwise repaid in respect of such taxes."
Section 7. This Act shall take effect on October first, nineteen hundred and forty-six.
Approved: October 21, 1946.
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