By Elijah Joseph C. Tubayan
THE GOVERNMENT is looking at offering its planned one-time tax amnesty program in April next year, coinciding with the deadline for filing income tax returns, the Department of Finance (DoF) said.
“Most likely the amnesty will come in April. We don’t want the taxpayer to be filing many things… file amnesty and income tax at the same time,” Finance Secretary Carlos G. Dominguez III told reporters late Wednesday.
“Most likely, do it at one time… I think that’s the most reasonable,” he added.
“By that time it’s good because it will increase our revenues and basically help us in our tax administration. But the sooner we get it, the better.”
In order to meet that timetable, Mr. Dominguez said the general tax amnesty law — now being prepared in the Ways and Means committee of the House of Representatives — should be enacted next quarter.
House Ways and Means committee chairman Dakila Carlo E. Cua has said a technical working group is now finalizing the bill for approval by the entire committee when 17th Congress convenes for its third regular session late next month.
Committee approval will pave the way for approval by the House in plenary session. The bill then goes to the Senate for deliberation and approval. Major differences will be ironed out in a bicameral conference committee composed of leaders of both chambers. The harmonized measure then goes back to each chamber for ratification, and is then submitted to Malacañang for enactment.
In its original form, House Bill No. 7105 will grant qualified amnesty applicants immunity from charges, but will require them to pay a rate of eight percent of their net worth as of taxable year 2017.
It also includes relaxation of bank secrecy restrictions to enable the Bureau of Internal Revenue to look into applicants’ bank accounts to check accuracy of their declarations during the amnesty period.
Mr. Dominguez added that the planned amnesty program’s implementing rules and regulations will include incentives and penalties for those who apply for amnesty.
“If you declare early, the amount is less. As you delay it gets more and more. We will also… give them an incentive if they will file early,” he explained.
Tax Management Association of the Philippines (TMAP) President Raymund S. Gallardo, who takes part in Ways and Means committee technical working group discussions on the bill, called for clearer provisions.
He noted, for instance, that one consideration is the extent of increase of assets, as declared in the amnesty application.
“It is generally advantageous to applicants,” Mr. Gallardo said in a mobile phone message.
“However, this may be prone to abuse in the sense that applicants may just report a minimal increment just to avail,” he explained.
“It may also not be attractive to those who do not have any incremental assets to declare and therefore cannot avail but would [otherwise] just want to buy peace of mind from BIR (Bureau of Internal Revenue) investigation… by paying the minimum amount.”
Mr. Gallardo also questioned the proposed automatic grant of immunity from suit upon submission of a statement of assets and liabilities and net worth that cannot be contested after the amnesty period.
“This will be inconsistent with the provision that penalties will be imposed if BIR will find out later that the incremental assets declared for amnesty were understated,” he said.
“For consistency, TMAP is proposing to have at least a one year window for the BIR to evaluate the application whether there is indeed an understatement of undeclared assets reported. After one year, the application is to be deemed approved if the applicant do[es] not receive any findings of understatement from the BIR.”
The Department of Finance has estimated that a general tax amnesty could add P26 billion to state coffers, which — according to BIR data — would be bigger than collections under each of the 18 previous programs since 1972.
The department has emphasized, however, that the value of the program does not lie in additional amounts to be collected under amnesty when the program is implemented, but rather in the resulting wider base as former delinquents are added to the system.