Revenue men to dig up bank records of the dead
The Bureau of Internal Revenue (BIR) is set to dig up bank records of those who died in the past five years to determine if their respective families have paid the proper taxes.
This is in line with the government’s effort to plug holes in the country’s revenue base and improve its fiscal position without raising taxes.
“When you die, there’s no more bank secrecy,” Revenue Commissioner Kim Henares said, referring to one of the exemptions of the bank secrecy law regarding an estate.
She said the government would ask banks to surrender the records of people who died in the last five years to find any hidden assets.
Finance Secretary Cesar Purisima last week said the government’s annual income from estate taxes averaged at just P1 billion in the last decade, although there was an increase to P2.5 billion last year.
The increase in collections last year had a caveat, Purisima said. The single biggest tax payment was from a rich Indonesian who happened to have assets in the Philippines, he explained.
Henares said the government also wants to see if banks have been letting people withdraw money from accounts of the deceased.
“For instance, a person dies with P10 million in the bank and that money suddenly disappears, we want to know where it went,” Henares said. “If that money was withdrawn after the person’s death, then the bank would be criminally liable.”
She added that even if a dead person’s money had been donated to charity, a donor’s tax would still have to be paid.
“We will require them to submit it. If they refuse, we will get subpoenas,” she said.
Purisima said estate taxes present opportunities for the revenue agency, which has been missing its monthly collection targets.
“Given the increase in asset value, we believe (estate tax collections) should be higher,” Purisima said.
The finance chief said the BIR recently reduced the tax to a maximum of 20 percent of the deceased person’s assets. This was substantially lower than the previous 70 percent. By reducing the tax, the government hopes to improve compliance among the families of the deceased.
