Published 22 February 2019, The Daily Tribune
On 14 February 2019, President Rodrigo R. Duterte signed Republic Act No. 11213, otherwise known as the “Tax Amnesty Act” which provides a one-time opportunity for taxpayers to settle outstanding tax obligations as of 31 December 2017. However, the President vetoed certain provisions in the enrolled bill, including the grant of the general amnesty, which was supposed to cover all unpaid internal revenue taxes.
Based on his line-veto message dated 14 February 2019, the President vetoed the grant of the general amnesty in the enrolled bill on the ground that it did not include adequate safeguards and measures against tax evasion, which may defeat the objectives of the amnesty such as raising revenues and expanding the tax base. As such, the President has requested the Congress to pass another general tax amnesty bill which will include the lifting of bank secrecy for fraud cases, the inclusion of automatic exchange of information, and safeguards to ensure that asset or net worth declarations are truthful.
Under the Act, availment of the amnesty grants the taxpayer immunity from payment of the covered taxes, as well as additions thereto, and from all appurtenant civil, criminal, and administrative cases and penalties under the National Internal Revenue Code of 1997, as amended (“Tax Code”) for taxable years 2017 and prior years. There are two (2) amnesty programs provided under the Act, specifically, the Estate Tax Amnesty and Delinquency Tax Amnesty. Salient features of each are briefly discussed as follows:
Estate Tax Amnesty
The Estate Tax Amnesty covers the estate of decedents who died on or before 31 December 2017, with or without assessments duly issued therefor, whose estate taxes have remained unpaid or have accrued as of 31 December 2017.
To avail of the immunity, the estate shall pay estate amnesty tax at the rate of six percent (6%) based on the decedent’s total net estate at the time of death, and file a sworn Estate Tax Amnesty Return at the Revenue District Office (“RDO”) of the Bureau of Internal Revenue (“Bureau”), which has jurisdiction over the last residence of the decedent. Filing of the return and the payment of the estate amnesty tax shall be made within two (2) years from the effectivity of the Implementing Rules and Regulations of the Act (“IRR”).
It must be noted that the President vetoed the provision in the enrolled bill that allows payment of only one (1) estate amnesty tax on estates with properties which are still in the name of another decedent or donor. The President reiterated that estate tax is not a tax imposed on the property; rather it is a tax on the privilege of transferring property to the heirs. As such, estate tax amnesty should be paid at every state of the transfer of the property.
Delinquency Tax Amnesty
The Act likewise provides amnesty to (1) delinquencies and assessments, which have become final and executory, (2) pending criminal cases with the Department of Justice or the courts for tax evasion and other criminal offenses under the Tax Code, (3) tax cases subject of final and executory judgment by the courts on or before the IRR takes effect; and (4) withholding tax agents who withheld taxes but failed to remit the same to the Bureau.
To avail of the Delinquency Tax Amnesty, the taxpayer shall file a sworn Tax Amnesty on Delinquencies Return with a Certification of Delinquency, and paying the amnesty tax at the following rates within one (1) year from effectivity of the IRR:
|Delinquency Case||Amnesty Tax|
|(1) Delinquencies and assessments, which have become final and executory||40% of the basic tax assessed|
|(2) Tax cases subject of final and executory judgement by the courts||50% of the basic tax assessed|
|(3) Pending criminal cases with the Department of Justice or the courts for tax evasion and other criminal offenses under the Tax Code||60% of the basic tax assessed|
|(4) Withholding tax agents who withheld taxes but failed to remit the same to the Bureau||100% of the basic tax assessed.|
The delinquency of the taxpayer who have availed of the Delinquency Tax Amnesty shall be considered settled and the criminal case and its corresponding civil or administrative case, if applicable, shall be terminated. The taxpayer shall likewise be immune from all suits or actions, including the payment of said delinquency or assessment, as well as additions thereto, and from all appurtenant civil, criminal, and administrative cases and penalties under the Tax Code on the internal revenue taxes that are subject of the tax amnesty. It bears to note, however, that the availment of the Delinquency Tax Amnesty do not imply any admission of criminal, civil, or administrative liability on the part of the availing taxpayer.
Other than providing taxpayers an opportunity to come clean with their tax obligations, the Act is likewise expected to pump up revenue collection, minimize administrative costs in pursuing tax cases, and de-clog the dockets of the Bureau and the courts. The Department of Finance estimated that the tax amnesty may generate P26 Billion for the administration’s infrastructure program.
However, the IRR will have to be issued before taxpayers may proceed to apply for the amnesty program. Consequently, taxpayers are now waiting for the Bureau to issue the implementing regulations on the Tax Amnesty Act.
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