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By Elijah Joseph C. Tubayan

DoF cites tax amnesty prerequisites

Posted on April 25, 2017

THE GOVERNMENT is biding its time in its plan to offer amnesty to tax delinquents until it lays firm groundwork for an effective program, the head of the Department of Finance (DoF) said.

THE GOVERNMENT will offer a tax amnesty "[w]hen we feel that they (taxpayers) are taking us seriously." -- Finance Secretary Carlos G. Dominguez III
“It’s not that it’s not a priority [but] there are things that have to be done to make any tax amnesty -- if there is one -- effective,” Finance Secretary Carlos G. Dominguez III told reporters yesterday at the DoF headquarters in Manila.

“Number one: they must realize that the government can actually collect the tax; and two: that other measures such as the lifting of the bank secrecy law are in place so that it is really serious.”

A leader of the House of Representatives -- from which all tax measures emanate by law -- yesterday reiterated the chamber’s general support for a tax amnesty program, including other measures needed to make it effective.

“No amnesty will be successful unless bank secrecy is lifted. Absent the lifting, we will end up with a short-term gain with recalcitrants going back to their old ways,” Deputy Speaker Romero Federico S. Quimbo said via text when sought for comment.

Both the Senate and the House have a number of tax amnesty proposals lined up in their respective ways and means committees, and the latter in February approved on third and final reading House Bill (HB) No. 4814, or the proposed Estate Tax Amnesty Law, and HB 4815 which sets a single rate for this levy compared to the existing range. The Senate has a counterpart to this bill in Senate Bill No. 293.

Mr. Dominguez told reporters it was still too early to tell whether the prospective amnesty will cover all or particular taxes.

He had first publicly broached the idea of a tax amnesty in late September last year. Earlier this month, he said an amnesty may be offered only after the government makes an example of big suspected tax cheats in order to send the message to all that it means business.

“That tax amnesty discussion came up because somebody asked me in Cebu: what did I think of the Indonesian amnesty. I said I think it has worked for them,” Mr. Dominguez recalled, referring to Indonesia’s eight-month program that resulted in at least 745,000 taxpayers declaring more than $330 billion of assets.

“And then they said: ‘Are you going to adapt it here?’ Then I said ‘Of course not’. Their problem is different from ours,” he explained.

“So we will certainly consider something in that area but it is really premature at this point in time.”

Finance Undersecretary Karl Kendrick T. Chua had said in an interview last week: “We are really studying it.”

Tax experts from both the government and private sector have backed the measure, while clarifying that the government has to follow a tax amnesty through by making sure that those who avail of the program will sustain compliance with the law -- something that was not achieved in numerous past offers that had covered either all or particular taxes.

The Finance chief yesterday signaled that he was on the same page on this concern with tax experts. Taxpayers, Mr. Dominguez told reporters, “have to realize that we can collect, that we are capable of doing it.”

Asked then on the possibility of offering such amnesty within the year, Mr. Dominguez said the government will launch the program “[w]hen we feel like they are taking us seriously.”