In November 2018, the senate approved the Tax Amnesty Bill, which is designed to generate at least P36 billion in revenue that could fund the numerous subsidies from the government.
Senate Bill 2059, which was approved on the third and final reading, seeks to grant a general tax amnesty in order to encourage taxpayers to pay correct taxes.
“We hope that this measure will encourage those in the formal and non-formal sector to legitimize, properly declare and pay the correct taxes without fear of civil, criminal or administrative penalties,” said Senator Sonny Angara in a press release from the Senate.
A fresh start
According to the new measure, all unpaid internal revenue taxes, including general taxes, estate taxes and delinquent accounts that are due for taxable year 2017 and prior years will be covered by the amnesty.
Angara says the amnesty may serve as a “fresh start” when it comes to dealing with something as important as taxes, as “parties involved may be absolved and unburdened by the sins of the past.”
Under the version passed by the Senate, taxpayers will be able to get a reprieve from estate taxes and pay six percent instead, which will be based on the total net estate of the decedent. A similar measure will also be implemented on all national internal revenue taxes such as excise taxes and value-added tax collected by the Bureau of Customs. Only a minimum tax or five percent of the total net worth will need to be paid.
To avail, you will need a notarized Statement of Assets, Liabilities, and Net Worth (SALN) to submit together with your General Amnesty Tax Return. There will also be discounts for those who avail early.
Also included in the Senate proposal is an amnesty on delinquencies, which allows taxpayers to avail of 40 percent of the basic tax for delinquencies, 50 percent for those with pending criminal cases, and 60 percent for cases deemed final and executory by the courts.
Those who choose to avail of the amnesty program will be immune from paying all taxes, as well as filing of criminal, administrative, and civil cases and penalties.
All data and information included in the SALN and tax return will be considered confidential and will not be permitted as evidence in any proceeding. In addition, a taxpayer’s books of accounts and other records during the years covered by the tax amnesty cannot be examined by the BIR.
Other facets of the measure
In order to complement all privileges granted through the amnesty program, the Department of Finance and other agencies, including controlled and government-owned corporations, local government units, and government financial institutions will be able to aggressively go after taxpayers who fail to comply.
The measure also seeks to create a new information management system as well as new methods that will allow the automatic exchange of tax information with more than 40 partner countries.