Comprehensive tax amnesty just a step away from enactment
THE PLANNED TAX AMNESTY program is now up for signing by President Rodrigo R. Duterte after the House of Representatives and the Senate ratified the measure on Wednesday and Thursday, respectively.
The program will provide a one-time legal relief for those with unpaid taxes for years up to 2017.
It seeks to broaden the country’s tax base and reduce administrative costs of the Bureau of Internal Revenue and courts that could otherwise be clogged with tax evasion cases.
The measure — which imposes an amnesty charge equivalent to a portion of the taxpayers’ outstanding unpaid taxes in exchange for immunity from civil, criminal and administrative penalties — covers unpaid estate tax that is collected by local governments, unpaid national taxes as well as national tax delinquency in specific circumstances.
Taxpayers will be given a year from issuance of implementing rules and regulations to avail of amnesty, except in the case of estate tax amnesty where interested parties will be given two years to avail. Discounts will be given to early availers.
For estate taxes, the amnesty charge is six percent based on decedents’ total net estate at the time of death declared in the estate tax amnesty return.
The general tax amnesty will charge a two percent rate based on total assets declared in a statement of assets, liabilities and net worth to be filed as part of the amnesty application, or five percent if the applicant were to opt for
net worth as base or P75,000-P1 million, “whichever is higher”.
The general tax amnesty covers all national internal revenue taxes such as, but not limited to income tax, withholding tax, capital gains tax, donor’ tax, valueadded tax, other percentage taxes, excise tax, and documentary stamp taxes collected by the BIR and the Bureau of Customs.
The amnesty on estate and other internal revenue taxes excludes those with pending cases with the Presidential Commission on Good Government, those involving unlawfully acquired wealth under the Anti-Graft and Corrupt Practices Act, violations of the Anti-Money Laundering Law, pending criminal cases for tax evasion and related charges, those involving felonies of frauds, illegal exactions and transactions, and malversation of public funds, and tax cases that have been final and executory.
The measure also includes an amnesty on tax delinquent accounts in specific circumstances, subject to a charge of 40-100% of the basic tax assessed depending on the circumstances.
These amnesty on delinquencies can be availed of in cases that have become final and executory where application for compromise has been requested due to doubtful validity of the assessment and the claim of financial incapacity of the taxpayer was denied by the Regional Evaluation Board or the National Evaluation Board composed of BIR officials on the day or before the implementing rules and regulations (IRR) of the amnesty program take effect.
Among others, the amnesty program on tax delinquencies also covers cases subject of final and executory judgment by courts on the day or before the IRR take place, as well as those involving withholding tax agents who withheld taxes but failed to remit to the BIR.
The final version ratified by Congress did not contain measures to relax bank secrecy restrictions and the automatic exchange of tax information (AEoI) with foreign institutions that were deemed crucial to verifying amnesty applicants’ declarations.
Lawmakers and tax experts argued that the said administrative measures violate the constitutional provision that a law must only have only one subject matter, but officials of the Finance department (DoF) have argued that these provisions are integral to an effective tax amnesty program.
Although the main objective is to grow the tax base, the DoF expects the tax amnesty program to generate P41 billion in additional revenue, and only P26 billion without the easing of bank secrecy and the AEoI.