Gov’t sees silver lining in tax amnesty: P27.5B

The Department of Finance (DOF) expects to collect over a fourth of the about P80 billion in tax delinquencies when the government implements its amnesty program in the second half of the year.

“The tax amnesty on delinquencies intends to wipe the slate clean for availing taxpayers. It also helps the government unclog administrative and judicial dockets of slow-moving cases. From our research, there’s around P80 billion worth of delinquencies pending in the books of the BIR [Bureau of Internal Revenue]. And this is not moving, probably in the last decade or so. And if at all, it increases,” Finance Undersecretary Mark Dennis Y. C. Joven said during last week’s Tax Management Association of the Philippines’ (TMAP) general membership meeting.

From 2005 to 2018, only 10 or less than 1 percent of the 1,064 cases filed by the BIR under its Run After Tax Evaders (Rate) program were resolved by courts in favor of the government.

Joven said the DOF had estimated to collect P21.26 billion from the amnesty on delinquencies.

Including the reprieve for estate taxes, the DOF projected collections to reach P27.54 billion.

On the sidelines of the meeting, director Euvimil Nina R. Asuncion of the DOF’s strategy, economics and results group told reporters the P21.26 billion was the amount that the BIR had estimated would be “highly collectible” from the total delinquencies to date.

“But that’s already a big amount, instead of being unable to collect that, and a zero-batting average in tax evasion cases,” Joven said.

Under Republic Act (RA) No. 11213 or the Tax Amnesty Act of 2019 signed by President Duterte last month, delinquencies and assessments that have become final and executory will have an amnesty rate of 40 percent of the basic tax assessed.

A higher rate of 50 percent will be slapped against tax cases still subject to courts’ final judgment.

An amnesty rate of 60 percent will apply to pending criminal cases with criminal information filed with the Department of Justice (DOJ) or the courts for tax evasion and other criminal offenses under the Tax Code, with or without assessments duly issued.

In the case of withholding agents that withheld taxes but did not remit them to the BIR, they will pay 100 percent of the basic tax assessed.

Had President Duterte not vetoed the general tax amnesty provision of RA 11213, another P6.82 billion would have been collected from delinquent taxpayers.

A general amnesty was supposed to cover all unpaid internal revenue taxes, except customs and import duties, in 2017 and prior years.

But Joven noted that as the President had indicated in his veto message, general tax amnesty must be coupled with safeguards, specifically the lifting of bank secrecy for tax purposes and automatic exchange of information in order to strengthen enforcement against tax evasion.

The BIR is already preparing the implementing rules and regulations (IRR) for RA 11213 through two separate revenue regulations (RRs), one each for the amnesty on delinquencies and estate tax amnesty, according to Joven.

Given the line vetoes made by the President, the implementation of these two amnesty programs cannot be made at the same time, according to Joven.

He said that a general tax amnesty could be implemented this year if the current 17th or the upcoming 18th Congress would pass a bill that carried with it the automatic exchange of information and the removal of bank secrecy.

The 17th Congress still has time during the lame-duck session after the May 13 midterm elections to pass such measure, he said.

If Congress can soon pass a general tax amnesty with the safeguards wanted by President Duterte in place, its implementation “may still be within the year … so potential revenues from the general tax amnesty can still come in within 2019,” Joven said.