House passes tax amnesty bill

November 24, 2018
Mikee Romero
Mikee Romero

The House of Representatives approved on third and final reading House Bill 8554 or the Tax Amnesty Act of 2018 with a vote of 213-7.

Principally authored by 1-PACMAN Rep. Mikee Romero, the bill seeks to provide delinquent taxpayers a chance to start over with a clean record by becoming tax-compliant and to avoid penalties and surcharges for the delinquency.

The bill will also help both formal and informal sectors be absolved by settling all their undeclared assets and previous unpaid taxes without fear of civil, criminal or administrative penalties.

On the other hand, the bill is further expected to raise additional P114.8 billion in immediate revenues for the government, clear case backlogs in both administrative and court proceedings, and enhance revenue administrations by having a wider tax base.

The amnesty in the country was in 2007 through Republic Act 9480 where 25,017 applicants generated a collection of P7.2 billion, or 0.07 percent of the gross domestic product (GDP).

For the coming 10 years, HB 8554 will be the amnesty that the government will apply in conjunction with one of the legislative priorities of President Rodrigo Duterte.

The provisions of HB 8554 encompass Estate Tax Amnesty, General Tax Amnesty, and Tax Amnesty on Delinquencies.

Heirs are then considered non-compliant and are prevented the use of their properties, rendering the properties idle and unproductive and therefore a drain to the economy as more income opportunities are lost.

To address this, HB 8554 provides that for two years, the authorized administrator or executor, or in the absence thereof, the legal heirs and recognized successors may avail themselves of the Estate Tax Amnesty at a rate of six percent of the net estate for taxable year 2017 and prior years.

Meanwhile, the General Tax Amnesty encompasses all national internal revenue taxes except value-added tax and excise tax collected by the Bureau of Customs.

Under this, a taxpayer may take advantage of the amnesty tax at the rate of two percent based on the taxpayer's total assets.

The provision aims to decongest the dockets of the BIR, Regional Trial Courts, Court of Tax Appeals, and the Supreme Courts by granting tax amnesty on delinquent accounts with final assessments; those that have become final and executory; and those with existing tax evasion cases at a rate of 40 percent, 50 percent, 60 percent, respectively.

In addition, HB 8554 mandates the BIR to establish a tax database of all taxpayers availing of the tax amnesty, list of total assets of applicants, and other relevant taxpayer information.