By Elijah Joseph C. Tubayan
THE HOUSE of Representatives’ Ways and Means committee hopes to approve a tax amnesty measure by “early March,” its chairman said on Monday, as it irons out details to make sure it brings more tax evaders into the fold.
“Early March possibly,” Quirino Rep. Dakila Carlo E. Cua told reporters after a public hearing yesterday when asked when he expected the bill to be approved at his committee’s level.
House Bill No. 7105, filed by Speaker Pantaleon D. Alvarez, Majority Leader Rodolfo C. Fariñas and Mr. Cua, seeks to “enhance revenue administration and tax collection by granting an amnesty on all unpaid internal revenue taxes imposed by the national government.”
The measure offers a flat eight percent tax on the net worth of those who will avail of amnesty covering taxable year 2017, or P10,000 to P10 million, depending on taxpayer bracket “whichever is higher,” in exchange for immunity from civil, criminal and administrative penalties.
The bill also relaxes bank secrecy restrictions, allowing the BIR to inspect the bank accounts of those who will avail of tax amnesty in order to ensure the accuracy of their declarations.
The amnesty forms part of a follow-up to Republic Act No. 10963 — or the Tax Reform for Acceleration and Inclusion Act — as that law, enacted in December and which took effect last month, saw projected revenues whittled down to over P90 billion from P133.8-157.2 billion originally after both chambers of Congress watered down some provisions.
The follow-up package, which also includes a proposed increase to the motor vehicle users tax that is pending in the committee, is designed to bring projected revenues closer to the original intent.
There will be up to five tax reform packages that are meant to cover a fourth of the P8-trillion planned state infrastructure investments until 2022, when President Rodrigo R. Duterte will end his six-year term.
The second package, submitted to the House last Jan. 16, consists of a proposed cut in corporate income tax to 25% from 30% currently in order to put the Philippines at par with its Southeast Asian competitors, as well as removal of redundant fiscal incentives that have been costing the government more than P300 billion annually in foregone revenues.
Mr. Cua said the proposed new tax amnesty should “be more successful than the past” since it will employ new technology to clean up the Bureau of Internal Revenue’s taxpayer database.
“This is important since we already passed the (first) tax reform (package) and we’re going to package 2,” Mr. Cua said, citing the need to ensure that the reformed tax system will have a more reliable taxpayer database.
The committee is focusing on details like amnesty rate, target revenue, scope of those qualified to avail, as well as the extent of privileges to be granted.
During the hearing, Donaldo B. Boo of the Finance department’s National Tax Research Center, proposed that the rate should be imposed on taxpayers’ assets — similar to Indonesia’s model — to avoid bloating of liabilities that would result in a lower tax assessment. “It is simpler than the net worth. The use of total assets can be considered to avoid bloating or overstatement of liabilities just to lower the net worth,” he said.
He also proposed a three-year assessment period against the bill’s proposed one year, to “give more time to the Bureau of Internal Revenue to study and verify the correctness of their statement of assets and liabilities and their tax amnesty return.”
Mr. Boo also proposed to give a lower amnesty rate to those who would avail early in the offer period.
The proposed amnesty offer, however, will be limited to those who do not have pending criminal cases filed in court for tax evasion, money laundering or for unexplained wealth.
Maria Lourdes P. Lim, tax managing partner at PwC Philippines, advised the committee to review the proposed eight percent amnesty rate by taking inflation and target revenues into consideration. “The minimum amount appears to be low, since it’s the same rate as the 2007 tax amnesty law,” Ms. Lim noted.
Mr. Cua cited the need to strike a balance as the committee tackles amnesty details.
“We need to study it because its a risk-and-reward issue,” he explained.
“There’s a logic that if we are to strict, then they may not find the package that attractive and not actually avail. Then again… we need to study how much the government is willing to pardon the infractions of these people.”