The Department of Finance (DOF) is set to review estate tax declarations for the past five years to improve the tax collections.
According to Finance Secretary Cesar Purisima, the underdeclaration of taxes is one of the reasons why the Bureau of Internal Revenue (BIR) failed to reach May 2013 collection target.
The BIR collected P111.90 billion in tax revenue for the said month, lower than its P115.12-billion target. Purisima said that reviewing the declaration of estate taxes is an area of opportunity to improve the tax bureau’s collection.
The estate tax is a tax levied on the privilege of transferring property upon the death of the owner. It is not a property tax.
The estate tax accounts for only less than 1 percent of the BIR’s total revenues. Earlier, the government said that it is considering raising estate tax collections to P50 billion annually.
Purisima said that the DOF and BIR will review estate tax filing from 2008 onward.
The secretary said that based on records, property tax collection remained flat from 2008 to 2011.
“[BIR] Commissioner Kim Jacinto-Henares and I have identified, and based on our review [that for]the past five years, the collection has been rather flat. Except for 2012 when I mentioned that it’s up 60 percent but given the increase in asset values, we believe that numbers [of collections]should be higher,” he said.
He explained that first, the government will write to the banks nationwide for estate tax information.
“One of the things that happen when you file an estate tax return is that you waive the secrecy of bank deposit, so we’ll be writing the banks, so that they can provide us information,” the DOF chief said.
On the other hand, Purisima added that the government will also look into the tax collections from self-employed Filipinos.
He said that of 1.8 million self-employed in the country, only 404,000 pay income tax return.
“Our goal is to increase the number of collection to P300 billion,” he said.