DoF sees tax amnesty raising collections, clearing backlog

THE DEPARTMENT of Finance (DoF) said its version of the planned tax amnesty offer scheduled for 2019 will increase collections and clear the case backlog for unpaid property tax.

“We hope to improve further our revenue collections with a proposed tax amnesty program. The program will help clear the dockets as well as enable the transfer of stranded real properties so that they can be made economically useful,” Finance Secretary Carlos G. Dominguez III said in a speech before the Rotary Club of Manila.

“In particular, we propose an estate tax amnesty where government collects only 6% of the net undeclared estate tax for those who died prior to January 1, 2018. For your information, the previous estate tax was 20%,” Mr. Dominguez said.

“We are likewise proposing a general tax amnesty on all unpaid internal revenue taxes excluding internal revenue taxes arising from importation and customs duties,” he added.

He said that the department will offer different rates for amnesty availers with criminal charges.

“We are proposing an amnesty on tax delinquencies offering a rate of 50% on the basic tax only, excluding surcharges and interest charges. For those already facing criminal cases in court, we are proposing a rate of 80% of the basic tax only,” he said.

Mr. Dominguez said last month that the government hopes the amnesty bill passes before the end of the year, as it plans to make the amnesty offer in April 2019 — in time for the deadline for filing income tax returns.

The House of Representatives approved an estate tax amnesty measure on final reading in February 2017 for House Bill No. 4815, the provisions of which are consistent with the DoF’s proposal.

The general amnesty bill (HB 7105) remains pending at the ways and means committee — and committee approval is expected after the regular session resumes later this month.

Meanwhile, the counterpart bills for the estate and general tax amnesty in the Senate (SB 293 and SB 942 respectively) are also awaiting committee-level approval.

The tax amnesty bills are part of the so-called Package 1B, the follow- up revenue generating measures for the Tax Reform for Acceleration and Inclusion ( TRAIN) law. The package also includes an increase in motor vehicle user charge and the easing of the bank secrecy law.

Tax Management Association of the Philippines President Raymund S. Gallardo, who was among the resource persons in the House ways and means committee technical working group, said earlier that the issues with the general tax amnesty bill include the basis for the amnesty rate, and the waiver of the bank secrecy law.

Other proposed benchmarks for the general amnesty rate include total net worth, total assets, and the level of tax delinquency. The waiver of the bank secrecy law is being proposed for the amnesty period and possibly beyond.

In its current form, the general tax amnesty imposes an 8% tax on the amnesty participants’ net worth or P10,000 to P10 million, depending on the type of taxpayer, whichever is higher — in exchange for immunity from civil, criminal, and administrative penalties on payments made during taxable year 2017 and previous years. The Senate version meanwhile offers a rate of 5%.

The Department of Finance has said that the tax amnesty could generate P26 billion initially, and that overall collection growth will rise post-amnesty, due to the widening of the tax base. —