Government to press collection of estate taxes

By Iris C. Gonzales (The Philippine Star) Updated August 02, 2011 12:00 AM

MANILA, Philippines - The Aquino administration hopes to increase estate tax collections by stepping up efforts to monitor payments made by heirs of deceased persons, Finance Secretary Cesar Purisima said yesterday.

In a budget hearing at the House, Purisima said there would be a strong focus on estate taxes as yearly collections from this type of tax are very low.

“For the past seven years, collections have been below P1 billion,” the Finance chief said.

Purisima believes that yearly collections can go up to more than a billion. He said that in some cases, the amount could go as high as P3 to P5 billion for only one person.

“So I believe, we should be collecting more than a billion from estate taxes,” Purisima said.

In connection with this plan, the Bureau of Internal Revenue (BIR) would be investigating banks to find out if their officers are guilty of conniving with the heirs of deceased persons in order for them to skirt around their estate tax obligations.

At present, heirs of deceased persons need to pay a tax equivalent to 20 percent of the estate of the deceased.

Some individuals try to escape this provision by withdrawing the accounts of the deceased persons without declaring to the banks the incident of death.

The campaign is similar to the program launched during the time of former BIR Commissioner Joel Tan-Torres.

Through the project, the agency will monitor the payment of estate taxes which the BIR for so many years has not given much attention to.

According to data from the National Statistics Office, there were 403,191 deaths in 2004, 415,271 in 2005 and 389,081 in 2006.

Based on BIR records, however, only 29,198 estate tax returns were filed in 2007, 29,863 in 2008 and 26,811 in 2009.

These figures revealed that there is a very low number of estate tax returns filed. Collections amounted to P649.9 million in 2007, P854.9 million in 2008 and P876.8 million in 2009.

The BIR said it will coordinate with civil registers, hospitals, memorial parks, cemeteries, funeral parlors, crematoriums, judicial clerks of courts, obituaries, life insurance companies and other financial institutions, to access and secure records of the decedents.

The BIR is tasked to collect P920 billion this year, higher than last year’s actual collections of P822.39 billion.

Revenue Regulations (RRs)
are issuances signed by the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, that specify, prescribe or define rules and regulations for the effective enforcement of the provisions of the National Internal Revenue Code (NIRC) and related statutes

Revenue Memorandum Orders (RMOs) are issuances that provide directives or instructions; prescribe guidelines; and outline processes, operations, activities, workflows, methods and procedures necessary in the implementation of stated policies, goals, objectives, plans and programs of the Bureau in all areas of operations, except auditing.

Revenue Memorandum Rulings (RMRs) are rulings, opinions and interpretations of the Commissioner of Internal Revenue with respect to the provisions of the Tax Code and other tax laws, as applied to a specific set of facts, with or without established precedents, and which the Commissioner may issue from time to time for the purpose of providing taxpayers guidance on the tax consequences in specific situations. BIR Rulings, therefore, cannot contravene duly issued RMRs; otherwise, the Rulings are null and void ab initio

Revenue Memorandum Circular (RMCs) are issuances that publish pertinent and applicable portions, as well as amplifications, of laws, rules, regulations and precedents issued by the BIR and other agencies/offices.

Revenue Bulletins (RB) refer to periodic issuances, notices and official announcements of the Commissioner of Internal Revenue that consolidate the Bureau of Internal Revenue's position on certain specific issues of law or administration in relation to the provisions of the Tax Code, relevant tax laws and other issuances for the guidance of the public.

BIR Rulings are official position of the Bureau to queries raised by taxpayers and other stakeholders relative to clarification and interpretation of tax laws.
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