Delinquent taxpayers may have a reason to rejoice, as a new tax amnesty program was just recently filed with the House of Representatives.
House Bill (HB) No. 7105, authored by House Speaker Pantaleon Alvarez, Majority Leader Rodolfo Fariñas, and Ways and Means Committee Chairman Dakila Carlo Cua, aims to enhance revenue administration and collection by granting an amnesty on all unpaid internal revenue taxes imposed by the national government for taxable year 2017 and prior years.
The last time a tax amnesty program was offered in the Philippines was through Republic Act (RA) No. 9480, which took effect on May 24, 2007. Similarly, RA 9480 offered a tax amnesty covering all national internal revenue taxes for taxable year 2005 and prior years.
No less than the Department of Finance (DoF) has thrown its support for HB 7105, with DoF Secretary Sonny Dominguez underscoring the program’s aim to offer delinquent taxpayers a chance for a “clean slate.”
Although the proposed tax amnesty will undoubtedly improve the current administration’s revenue collection efforts, the program also aims at instituting an “Integrated Information Management Program” that would assist the DoF, in coordination with the Bureau of Internal Revenue (BIR), in enhancing revenue administration, collection, and policy formulation.
With that, we discuss below the salient features of HB 7105:
Any individual (including trusts and estates) and corporate taxpayers may avail of the tax amnesty by filing with the BIR a Notice and a Tax Amnesty Return accompanied by financial statements or a Statement of Assets, Liabilities, and Networth (SALN) as of December 31, 2017. Those not covered by the program include withholding agents with respect to their withholding tax liabilities, and those with pending criminal cases filed in court for tax evasion, among others.
The SALN shall contain a declaration of the taxpayer’s assets, liabilities, and net worth as of December 31, 2017, and shall be presumed true and correct. However, within a year from the filing of the Tax Amnesty Return and SALN, the BIR shall initiate a process to ensure the truthfulness of the SALNs filed. To this end, the DoF and the BIR shall formulate the implementing rules and regulations (IRR) necessary to execute the provisions of the tax amnesty program.
For individual and corporate taxpayers, the amount of amnesty tax to be paid may range from 8 percent of the taxpayer’s networth, or P10,000, whichever is higher, to P10 million or more, depending on the amount of the taxpayer’s networth. Non-stock corporations and government owned and controlled corporations are subject to a lower rate of 4 percent.
For taxpayers who have been issued tax assessments (whether preliminary assessment notices, final assessment notices, or final decisions on disputed assessments), the tax amnesty rate shall be 50 percent of the amount of the basic tax assessed.
The Tax Amnesty Return and SALN shall be filed with the Revenue District Officer (RDO) of the place of residence or principal place of business of the taxpayer within two years from the issuance by the DoF and the BIR of the IRR.
Taxpayers who have availed themselves of the tax amnesty and have fully complied with the requirements enumerated above shall be granted immunity from civil, criminal, and administrative penalties under the Tax Code, as amended.
Considering that HB 7105 forms part of the follow-up package, Package 1B of the Tax Reform for Acceleration and Inclusion Act (TRAIN), members of the Ways and Means Committee are looking at the approval of the tax amnesty program by early March of this year. With the possibility of the program being the last tax amnesty measure to be enacted (as far as the current administration is concerned), delinquent taxpayers should keep their eyes peeled to grab the chance to start anew, a chance for a clean slate.
Atty. Maria Louella “Peaches” Aranas is a seasoned tax lawyer and Managing Partner at LMA Law office. She is also at the forefront of The Sandy Project, a dengue awareness and prevention advocacy that she started in 2013.