Veto halves expected take from tax amnesty bill, DoF says

THE DEPARTMENT of Finance (DoF) expects to generate around P27 billion from the tax amnesty measures that were not vetoed, or less than half of its earlier projections, with the implementing rules for the law to be released soon.

DoF Undersecretary Mark Dennis Y.C. Joven of the Revenue Operations Group said the government still expects P27.541 billion in fresh revenue from the remaining amnesty measures provided by the Republic Act 11213, which was signed but partly vetoed by President Rodrigo R. Duterte.

This is well below the P63.5-billion tax take under the original projections, as well as the P34.341-billion estimate for the bill approved by Congress, he told members of the Tax Management Association of the Philippines during their membership meeting yesterday.

The tax amnesty program looked to impose an amnesty charge equivalent to a portion of the taxpayers’ outstanding unpaid taxes in exchange for immunity from civil, criminal and administrative penalties.

From a five-pronged tax amnesty bill, the bill signed by Mr. Duterte retained only the provisions for estate tax amnesty, seen to generate P6.28 billion, and for tax delinquencies worth P21.26 billion.

The Chief Executive removed the provision for a general tax amnesty — which could have raised P13.63 billion if implemented. Mr. Duterte said he was forced to remove the measure in the absence of powers for the state to better run after tax evaders, namely the relaxation of the deposit secrecy law and the automatic exchange of information with foreign tax authorities.

The estate tax amnesty will impose a flat rate of 6% for all unsettled estates at a minimum of P5,000, against the old practice of levying 5-20%. The new law also provides for rates for delinquency of 40%, 50%, or 60% of the basic tax depending on the charge. Meanwhile, unremitted withholding taxes will still have to be settled in full.

Mr. Joven said the “truncated” Tax Amnesty Act still provides a fresh start for taxpayers, as they seek to unlock value from property that cannot be disposed of due to unpaid estate taxes and clearing up the backlog of cases handled by the Bureau of Internal Revenue (BIR).

Mr. Joven said work has started in drafting separate revenue regulations for the two amnesty schemes, and will be published “in the next two months” in keeping with the 90-day window provided under the law.

Finance Secretary Carlos G. Dominguez III has said that the department will ask Congress to pass measures covering the unsigned provisions of the amnesty bill to help raise even more revenue, in the hope that the measures can be tackled during the last session days from May to June or early in the 18th Congress which opens June 30.

DoF Director Euvimil Nina R. Asuncion added that while the remaining tax packages may not clear Congress, they are gunning for the approval of the “Package Two Plus” which will raise the excise duties on alcohol and cigarettes. This, in turn, should plug the funding needs of the Universal Health Care Law also signed by Mr. Duterte in February.

In a separate report, Moody’s Investors Service said it expects tax collections to rise further this year supported by the Tax Reform for Acceleration and Inclusion (TRAIN) law.

“We expect a continued increase in revenue generation this year because the TRAIN law codified gradual increases in excise tax rates that took effect at the beginning of this year,” Moody’s said, noting that it continues to project fiscal stability in the Philippines.

“[W]e expect the fiscal deficit to slightly narrow this year in light of the government’s outlooks for revenue and expenditure.”