Tax amnesty, alcohol levy hike advance

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tax BIR

A PLANNED general tax amnesty stepped closer to offer as the House of Representatives on Tuesday approved the measure on third and final reading a day after the Senate did the same, while a proposal to increase the tax on alcohol products bagged committee approval.

House Bill 8554, or the proposed “Tax Amnesty Act of 2018,” covers estate tax and general tax liabilities for taxable years up to 2017.

House Ways and Means Committee Chairperson Estrellita B. Suansing of Nueva Ecija’s 1st district had said during her sponsorship speech on Nov. 14 that the measure is projected to add P114.8 billion in revenues. The program, however, is designed more to bring more tax delinquents into the fold, thereby expanding the country’s tax base.

The bill will grant an estate tax amnesty at a six percent rate based on a decedent’s net estate, provided that legal heirs apply within two years from effectivity of the measure’s implementing rules and regulations. The general tax amnesty provision imposes a two percent rate based on an applicant’s total assets as of Dec. 2017. Interested parties will have a year from start of the program to apply.

The immunities and privileges under the amnesty package, however, will not be applied should it be proven that the declared estate value and total assets are understated by at least 30%.


Further, the bill will grant an amnesty on delinquencies under various stages of prosecution. Ms. Suansing had said in the same speech that this move intends to “decongest the dockets of BIR (Bureau of Internal Revenue), Regional Trial Courts, Court of Tax Appeals and the Supreme Court.”

The measure provides that tax assessments which have become final and executory; tax cases that are subject of final and executory judgment by courts; and pending tax evasion cases will have amnesty rates of 40%, 50% and 60%, respectively.

Also on Tuesday, the House Ways and Means Committee approved its version of a tax reform that will raise the excise tax of alcohol products, which the Department of Finance (DoF) said will contribute just P7.8 billion in revenues.

“Our initial estimate on the revenue arising from the changes to the House bills on alcohol, in total for 2019, from the original P32 billion, we estimate that the substitute bill that is emerging is going to generate only P7.8 billion, that is 24% of the original,” Finance Undersecretary Karl Kendrick T. Chua told lawmakers in the committee.

He also noted that by 2022, the reform will yield collections of P60 billion, instead of the P173 billion projected for the original proposal the department had submitted to Congress.

The unnumbered substitute bill proposed that, effective Jan. 2019, distilled spirits will be levied a specific tax rate of P30 per proof liter, in addition to a 22% ad valorem tax of net retail price (NRP) per proof, excluding the excise tax and the value-added tax. The specific tax rate will be increased by P5 per year until 2022 and by seven percent every year beginning 2023.

This compares to the existing tax on distilled spirits that consists of a 20% ad valorem tax on NRP per proof and a specific tax per proof liter of P23.40 in 2019.

Moreover, sparkling wines will have an ad valorem rate of 15% based on NRP per liter, which is currently not imposed, and a P650 specific tax.

For still wines and carbonated wines containing 14% alcohol by volume, the excise tax will be P40 from P37.90 currently; whereas those containing more than 14%, the rate will be increased to P80 from P75.90.

The excise tax for sparkling and still wines will increase by seven percent every year, starting 2020.

For fermented liquors, the excise tax will increase to P28 from P25.42 in 2019, to P32 in 2020, P34 in 2021 and P36 in 2022. Rates will rise by seven percent every year starting 2023. — C. A. Tadalan