The House of Representatives has recommended for Senate action a bill that grants tax amnesty to errant taxpayers.
House Bill 8554 or the “Tax Amnesty Act of 2018,” principally authored by Party-list Rep. Michael Romero of 1-PACMAN party-list, was approved on third and final reading Tuesday night on a vote of 213-7 with no abstention
The bill, Romero said, is expected to raise additional P114.8 billion in immediate revenues for the government, clear case backlogs in both administrative and court proceedings, and enhance revenue administrations by having a wider tax base.
Rep. Estrellita Suansing of Nueva Ecija, chairman of the House Committee on Ways and Means and sponsor of the bill at the plenary floor, echoed Romero’s view.
She said the bill provides delinquent taxpayers a chance to start over with a clean slate by becoming tax-compliant and to avoid penalties and surcharges for the delinquency,
“For both formal and informal sectors, they will be absolved by settling [the taxes due] all their undeclared assets and previous unpaid taxes without fear of civil, criminal or administrative penalties,” Suansing said
Suansing noted that the last amnesty was granted in 2007 through Republic Act 9480 where 25,017 applicants paid some P7.2 billion pesos, or 0.07 percent of the gross domestic product (GDP).
For the next 10 years, HB 8554 will be the amnesty program that the government will apply in conjunction with one of the legislative priorities of President Rodrigo Duterte.
The provisions of HB 8554 encompass Estate Tax Amnesty, General Tax Amnesty, and Tax Amnesty on Delinquencies.
On the matter of the Estate Tax Amnesty, Suansing observed that estate taxes account for a very small percentage of the tax collection of the Bureau of Internal Revenue.
“This means that despite the increase in numbers of deaths, there is a greater percentage of the legal heirs who did not file the required Estate Tax Return,” she said.
Suansing reasoned that few may have known that even if the estate is exempt from taxes, legal heirs must still file the Estate Tax Return.
But when heirs fail to file a return within a certain period, penalties and interest are incurred.
Heirs are then considered non-compliant and are prevented the use of their properties, rendering the properties idle and unproductive and therefore a drain to the economy as more income opportunity is lost.
To address this, HB 8554 provides that for two years, the authorized administrator or executor, or the legal heirs and recognized successors may avail of the Estate Tax Amnesty at a rate of 6 percent of the net value ofthe estate for taxable year 2017 and prior years.
The General Tax Amnesty, on the other hand, encompasses all national internal revenue taxes except value-added tax and excise tax collected by the Bureau of Customs.
Under this, a taxpayer may avail of the amnesty tax at the rate of 2 percent based on the taxpayer’s total assets.
“It will be a one-time opportunity for the erring taxpayer to file and pay their tax returns with one year worry-free from any penalties, surcharges, even criminal, civil, or administrative cases as long as the declaration is truthful and honest,” Suansing said.
“At a rate of 2 percent of the total assets, the taxpayer will have a cordial relationship with tax authorities and may move forward with a clean slate,” she added.
Lastly, HB 8554 imposes the Tax Amnesty on Delinquencies, which Suansing described as “the most exceptional feature” of the measure.
The provision aims to decongest the dockets of the Bureau of Internal Revenue, Regional Trial Courts, Court of Tax Appeals, and the Supreme Courts by granting tax amnesty on delinquent accounts with final assessments; those that have become final and executory; and those with existing tax evasion cases at a rate of 40 percent, 50 percent, 60 percent, respectively.
“The government is moving forward from these unending and tiring pursuits of non-compliant citizens by encouraging the taxpayer to merely pay at a rate of 40 percent, 50 percent, 60 percent, respectively, of the basic tax which excludes the penalties and surcharges should there be any imposition or decision to pay,” Suansing explained.
In addition, HB 8554 mandates the BIR to establish a tax database of all taxpayers availing of the tax amnesty, list of total assets of applicants, and other relevant taxpayer information.