One-time tax amnesty program planned for next year

After establishing the credibility of its fight against tax evasion with the success of its case against Mighty Corp., the Duterte administration is considering offering a “one-time, big-time” tax amnesty program next year, Budget Secretary Benjamin Diokno said.

Diokno told participants of the 55th Philippine Economic Society Annual Meeting and Conference that he believed this was the best time to have an amnesty program.

To be able to implement a tax amnesty program, one must have the credibility and capability to run after tax evaders, Diokno later told reporters.

“I think we have established enough credibility at this time,” he said, citing the case of Mighty.

Early this year, Mighty cigarettes had been found bearing fake tax stamps to evade excise tax payments, such that the government slapped the homegrown manufacturer three tax evasion cases worth nearly P38 billion.

The government eventually decided to settle with Mighty. Under the deal, the Bulacan-based company had to sell P46.8 billion in assets to tobacco giant Japan Tobacco International. The government will also receive P30 billion to cover the tax deficiencies.
As part of the tax settlement, the Department of Justice last month dismissed the tax evasion cases against Mighty owner Alexander Wongchuking, president Edilberto Adan, executive vice president Oscar Barrientos and treasurer Ernesto Victa.

Last year, Finance Secretary Carlos G. Dominguez III said that under its comprehensive tax reform program, 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, and on pending cases in courts.

Dominguez had also said the Department of Finance was looking at settlement through payment of a minimum of 40-percent basic tax as amnesty tax.

According to Dominguez, the amnesty program would be legislated “to clear up all tax cases.”

Separately, Finance Undersecretary Karl Kendrick T. Chua had said the plan to legislate a final amnesty would be “absolute” in the sense that its application would clear all tax dockets in the Bureau of Internal Revenue, Bureau of Customs and the courts.

It would, however, exclude criminal cases, Chua said.

Once legislated, there would be no other tax amnesty for at least the next 25 years, he said.

The DOF also plans to impose higher amounts for delayed amnesty payments and allow compromise deals for cases pending in the Court of Tax Appeals that have assessments.
In a statement on Wednesday, the DOF said excise tax collections from Mighty cigarettes jumped 200 percent to P6.2 billion in September to October, or after the local brand was acquired by JTI, from only P2.1 billion a year ago.

Dominguez had said the additional excise taxes to be collected from Mighty products under its new owner would reach P40 billion next year.