House eyes amnesty on estate tax collections

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The House of Representatives’ ways and means committee has passed a substitute bill that seeks to grant amnesty in the payment of estate taxes.

Committee chairman, Rep. Dakila Carlo Cua of Quirino, spearheaded the passage of the unnumbered bill that substituted House Bill 1889 authored by Rep. Arthur Defensor Jr. of Iloilo (Third District) and HB 3010 by Deputy Speaker and Rep. Romero Quimbo of Marikina City (Second District), both titled “An Act Granting Amnesty in Estate Tax.”

The substitute bill seeks to increase tax collection levels by granting amnesty in the payment of unsettled estate taxes and to promote the settlement of estates. The amnesty would free up properties of unsettled estates, with the goal of generating financial transactions and stimulating economic activity.

The bill provides that the tax amnesty shall cover estate taxes for taxable year 2016 and for prior years that have remained unpaid as of December 31, 2016.


It grants the following immunities and privileges to taxpayers who avail of the tax amnesty: Immunity from the payment of estate taxes, civil, criminal or administrative penalties; the taxpayer’s Estate Tax Amnesty Returns for 2016 and prior years shall not be admissible as evidence in all judicial, quasi-judicial or administrative proceedings; and the books of accounts and other records of the taxpayer for the years covered by the estate tax amnesty availed of shall not be examined.

Defensor explained the tax amnesty is being sought because the collection of the Bureau of Internal Revenue (BIR) on estate tax is insignificant, compared to the overall tax collection.

He said the amnesty is an administrative clean-up measure because there are so many properties tied-up to unsettled estate tax, which can reach billions of pesos and which have become idle capital.

“If these properties are sent back to commercial circulation and are made subject to transaction, such as sale, lease or joint venture, in the long run, they can generate more taxes,” said Defensor, the Deputy Majority Leader.

Quimbo explained the bill seeks to ensure the “properties that are caught in a bind, not being utilized and are
not being part of the economy, because estate taxes have remained unpaid, are brought back to commercial circulation.”

“The primary cause of the inability to settle estate tax is due to high estate tax rates and secondly, the inability to cope with the penalties that have accrued. In 95 percent of the cases, the penalties are even higher than the value of the properties,” said Quimbo.

Besides Quimbo, Defensor and Cua, the other authors of the substitute bill are Reps. Arlene Arcillas (First
District, Laguna), Rose Marie “Baby” Arenas (Third District, Pangasinan), Lianda Bolilia (Fourth District, Batangas), Winston “Winnie” Castelo (Second District, Quezon City), Eugene Michael de Vera (ABS party-list), Jesulito Manalo (Angkla party-list), Xavier Jesus Romualdo (Camiguin), Jose Antonio Sy-Alvarado (Bulacan) and Manuel Antonio Zubiri (Third District, Bukidnon).

Relatedly, the committee during the same hearing approved a substitute bill proposing a single tax rate of 6 percent on estates based on the value of the net estate. This would be done by amending Section 84 of the National Internal Revenue Code of 1997, as amended.

Cua said the objective of the bill is to reduce the existing estate tax rate and ensure fair taxation.

The bill substituted House Bills 458, 3311, 3528, 3794 and 4394 filed respectively by Reps. Manalo, Juliette Uy (Second District, Misamis Oriental), Angelina Tan (Fourth District, Quezon Tan), Rosenda Ann Ocampo (Sixth District, Manila), and Evelina Escudero (First District, Sorsogon).

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