The Finance department is pushing for the approval of a House bill that proposes an amnesty program for delinquent tax payers.
Finance Secretary Carlos Dominguez III said the proposal aims to bring more taxpayers back into the financial system and make them generate more revenues for the government.
“We want to include estate taxes. Because estate taxes need amnesty as well, especially those people who inherited lands and they did not change the title, we want to include them,” Dominguez said.
“It’s just that we want everybody to be back [in the tax system] and to be law-abiding,” he added.
Party-list Rep. Michael Romero of 1Pacman has filed House Bill No. 3655 that grants amnesty to taxpayers with unpaid taxes from 2015 and prior years.
Under the National Internal Revenue Code (NIRC) crafted in 1997, if the net estate is P200,000 the heirs are tax exempt. Those with tax due of P10 million and above should pay P1.2 million plus 20 percent of the excess over P10 million.
The bill, or “an act to increase revenues and to provide the foundation for an effective implementation of tax reforms by granting an amnesty on all unpaid internal revenue taxes imposed by the national government for taxable year 2015 and prior years,” according to Romero was in line with President Rodrigo Duterte’s priority program to reform the tax system including lowering the personal and corporate tax rates.
“While this will result in decreased revenue collections, my bill will complement the initiative as it will increase taxes that will be collected,” Romero said.
Under the bill, any person or corporation who wants to avail himself of the tax amnesty will file a notice and Tax Amnesty Return with the Bureau of Internal Revenue accompanied by a statement of assets, liabilities and networth as of Dec. 31, 2015.
For individuals, the penalty carries a flat rate of 5 percent or P50,000, whichever is higher, tax while corporations will be made to pay 5 percent or from P25,000 to P500,000 tax penalty. Other entities will also have to pay a 5 percent tax penalty or P50,000.
Romero explained that those who have availed of the tax amnesty will be granted immunity from the payment of taxes and civil, criminal or administrative penalties under the National Internal Revenue Code of 1997 arising from their failure to pay any and all internal revenue taxes for 2015 and prior years.
The taxpayer’s SALN as of Dec. 31, 2015 shall not be admissible as evidence in all proceedings related to internal revenue taxes that cover 2015 and prior years.
In addition, their books of accounts and other records for the years covered under the tax amnesty availed of will not be examined.
Romero said the tax amnesty cannot be availed of by withholding agents, those with pending cases under the Presidential Commission on Good Government, those with pending cases involving unexplained or unlawfully acquired wealth under the Anti-Graft and Corrupt Practices Act, and those with pending cases for violation of the Anti-Money Laundering Law.
Those with pending criminal cases for tax evasion or other criminal offenses under Chapter 2 of Title X of the National Internal Revenue Code of 1997 or felonies of fraud, illegal exactions and transactions and malversation of public funds and property under the Revised Penal Code do not qualify for the program.
In 2007, the tax amnesty law gave a six-month leeway for taxpayers to settle their dues at a lower penalty rate of five percent of their net worth or a fee of between P25,000 and P500,000.
Under the National Internal Revenue Code, penalties include a 20-percent interest and 25-percent surcharge for late filers.
Dominguez said earlier the tax amnesty program will cover real estate tax, estate taxes, regular taxes including income and value added tax and tax cases.
Dominguez said the amnesty will allow the DoF to get the legislated authority to settle by at least 40 percent or whatever is the desired amount to clear up all the tax cases.
Finance undersecretary and chief economist Karl Kendrick Chua said the agency was still formulating the proposal which would complement the initial tax reform proposal it submitted to Congress early this week.