Tax amnesty not likely soon
The government will a pursue massive tax amnesty after Congress lifts the bank secrecy law for tax purposes to make it easier to look into the accounts of alleged tax evaders, Finance Secretary Carlos G. Dominguez III said yesterday.
Dominguez told reporters on the sidelines of the Department of Finance’s 120th founding anniversary that the government “will certainly consider” tax amnesty although plans to do so were “premature at this point in time.”
“There are things that have to be done to make any tax amnesty, if there is one, effective. 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,” Dominguez said.
Due to a restrictive Bank Secrecy Law, the Philippines is one of only three countries—besides Lebanon and Switzerland—where tax administrators cannot access bank transactions.
The first package of the Duterte administration’s proposed comprehensive tax reform program included, among other tax administration measures, the relaxation of bank secrecy for fraud cases.
House Bill No. 4774 contained the DOF’s proposal to lower personal income taxes, broaden the value-added tax (VAT) base by cutting down on exemptions, increase excise taxes on petroleum and automobiles as well as reduce the estate and donors’ tax rates.
Specifically, the bill will adjust personal income tax brackets to correct “income bracket creeping”; reduce the maximum personal income tax rate to 25 percent over time, except for the “ultra-rich” who would be slapped a higher 35 percent, and shift to a simpler modified gross system.
It will also slap a tax on lottery while lowering the estate and donors’ taxes to a flat rate of 6 percent.
Also to be pursued under the first package are the mandatory use of fuel marking; mandatory issuance of e-receipts; mandatory interconnection of large and medium firms point-of-sale machines and accounting system with the Bureau of Internal Revenue, and mandatory use of GPS locks when transporting cargo from ports to economic zones and free ports.
Dominguez early this month said the government would “most likely come up with a tax amnesty program” to be designed “very similarly” to the one implemented in Indonesia.
In September last year, Dominguez said the government was considering amnesty for taxpayers with deficiencies in payments of property taxes, estate taxes, regular taxes such as income taxes and value-added tax as well as amnesty on pending cases in courts.
Dominguez had also said that the Department of Finance was looking at settlement through payment of a minimum of 40-percent basic tax as amnesty tax.
According to the finance chief, the amnesty program would be legislated “to clear up all tax cases.”
Separately, Finance Undersecretary Karl Kendrick T. Chua had said that the plan to legislate a final amnesty would be “absolute” in the sense that availment would clear all tax dockets in the BIR and the BOC as well as in courts.
It would nonetheless exclude criminal cases, Chua had said.
Once legislated, there would no longer be further tax amnesty for the next 25 years, according to Chua.
The DOF plans to impose a higher amount for delayed amnesty payments while also planning to allow compromise for cases pending before the Court of Tax Appeals that have assessments.
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