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BIR relaxes property transfer requirements

By Prinz Magtulis (philstar.com) | Updated November 2, 2016 - 6:41pm

A house in a Cagayan de Oro subdivision. File photo

MANILA, Philippines -- Property transfers just got easier with the Bureau of Internal Revenue removing the need to present proof that taxes were paid for acquiring the land for the first time.

Under Revenue Memorandum Circular 105-2016, submission of a copy of certificate authorizing registration (CAR) "shall no longer be required" on one-time property transfers.

The order, signed by BIR Commissioner Caesar Dulay, was dated Aug. 23, but was only released on Wednesday.

The CAR is proof that levies were paid for the property being transferred. Under the order, the CAR being pertained to is the document from the current owner's original acquisition of property before he or she transfers it again.

BIR officials could not be reached for comment as of this post.

But Benedict Tugonon, president of industry group Tax Management Association of the Philippines, welcomed the move.

"This will surely expedite the processing of tax clearances on real property transactions and avoid unnecessary potential issues," Tugonon said in a text message.

He alleged that before, requiring CAR has resulted into a "finding or fishing expedition" on past transactions involving the property, which he said should be tackled "separately."

"Requiring the submission of the previous CAR when the property was acquired was unreasonable and at times, impossible to comply," Tugonon said.

The tax agency, which accounts for around 80 percent of tax revenues, had been streamlining its requirements and procedures since the Duterte administration took over last June 30.

It has made "improving taxpayer satisfaction" one of its mandates, and in the process, extended validity period of tax certificates, lessened requirements to register tax identification and get permission to issue receipts.

BIR also suspended for two months all tax audits, while checking on their validity and penalizing erring revenue officers, among others.

In another move, it issued Revenue Memorandum Order 61-2016 that establishes a "standard taxpayer feedback system."

"(This is) consistent with the bureau's mandate to provide world-class frontline services to the taxpayers," the order dated Oct. 28 stated.

Under the order, customer survey forms should be conducted by all revenue district offices (RDOs) to comply with Republic Act 9485 or the Anti-Red Tape Act of 2007.

Forms and drop boxes for such purpose should be present at all RDOs, it said.

"An unannounced visit shall be conducted which shall include retrieval of the (customer survey forms) to ensure that the implementation of the feedback system is being followed," the order said.

BIR has been banking on better taxpayer service to raise its target revenue of P1.62 trillion this year.

From January to August, the agency already collected P1.058 trillion, up by a tenth year-on-year.

DOF plans massive tax amnesty programs

Philippine Daily Inquirer / 01:32 AM September 30, 2016

Alongside lower income tax rates but higher consumption taxes, the Department of Finance (DOF) is considering a massive tax amnesty in four areas as part of its tax policy reform program.

Finance Secretary Carlos G. Dominguez III told a tax reform dialogue on Wednesday night that the DOF was thinking of amnesty for taxpayers with deficiencies in payments of property taxes, estate taxes, regular taxes such as income taxes and value-added tax (VAT), as well as amnesty on pending cases in courts.

Dominguez said the finance department was looking at settlement through payment of a minimum of 40-percent basic tax as amnesty tax.


The finance chief said the amnesty program would be legislated “to clear up all tax cases.”

As part of its tax policy reform proposal, the DOF plans to lower the rate of the estate and donor’s tax, and also bring down transaction taxes on land, such as the documentary stamp tax, transfer tax and registration fees.

To compensate for the lower property tax, the DOF wants to centralize and rationalize the valuation of properties, increase valuation closer to market prices, as well as review valuation every three years and adjust it accordingly.

6-percent estate tax

Dominguez earlier said he wanted to see the estate tax rate of 20 percent cut to as low as 6 percent of the value of the property being transferred.

The lower estate tax rate would put it on a par with the tax level for capital gains, which a seller of a property must pay the Bureau of Internal Revenue (BIR).

Sen. Juan Edgardo “Sonny” Angara earlier filed Senate Bill No. 980, which he said sought to ease heirs’ tax burden from their deceased relatives’ assets.

“The end result is that a grieving family will be spared the further anguish of paying high estate taxes, which often delay the distribution of the assets to the heirs,” said Angara, chair of the Senate ways and means committee.

He noted that “[t]his tax hurdle, plus unfamiliarity with estate taxes and cultural avoidance to discuss death-related affairs, has led families to delay settling the estate, resulting in huge penalties and surcharges while use of assets is not maximized.”

Correct ‘income creeping’

Citing BIR data, Angara said just seven in every 100 deaths settle estate taxes, such that total payments accounted for a mere one-sixth of a percent of the BIR’s tax take.

Finance Undersecretary Karl Kendrick  Chua told reporters that the planned tax amnesty would be complementary to the first reform package, a bill which was already submitted to both houses of Congress.

The first of the six tax policy packages would adjust tax brackets to correct “income creeping,” reduce the maximum personal income tax rate to 25 percent over time, save for the “ultrarich” who would be slapped a higher 35 percent from 32 percent at present, and shift to a simpler modified gross system.

As lower personal income taxes would result in foregone revenues estimated at P180.3 billion by 2019, the DOF plans to offset it and gain P377.3 billion by expanding the VAT base by limiting exemptions to raw food, education and health products and services; increasing the excise slapped on all oil products and indexing it to inflation; as well as jacking up excise on automobiles.

The government stands to generate a net revenue gain of P197 billion from the first package by 2019.

The DOF is considering targeted programs similar to the existing conditional cash transfer program to shield the poor and vulnerable to higher consumption taxes, which would bring about higher prices of goods.

The first package would also include tax administration reform measures, including legislation to relax the bank secrecy laws for tax fraud cases and including tax evasion as a predicate crime to money laundering.

Clear tax dockets

In a presentation at a tax forum organized by the Senate Tax Study and Research Office on Thursday, Chua said the plan to legislate a final amnesty would be “absolute” in the sense that availment would clear all tax dockets in the Bureau of Customs, BIR and in courts.

It would nonetheless exclude criminal cases, Chua said.

Once legislated, there would no longer be further tax amnesty for the next 25 years, he said.
The DOF plans to impose a higher amount for delayed amnesty payments, according to the finance undersecretary.

It also plans to allow compromise for cases pending before the Court of Tax Appeals that have assessments, while those without assessments would have to pay 5-percent tax on net worth.

Self-employed professionals account for only 14% of taxes

By Prinz Magtulis (The Philippine Star) | Updated September 19, 2016 - 12:00am

MANILA, Philippines - Only 14 percent of the government’s total revenues come from self-employed individuals and professionals, burdening salary workers with huge levies which the government reiterated will be addressed.

“We have high tax rates for self-employed and professionals, yet we have a very narrow base among them,” Department of Finance spokesperson Paola Alvarez said in a statement over the weekend.

The figure has consistently gone down from 34 percent in the 1980s and down to around a fifth of entire revenues in the 1990s, she said, citing Bureau of Internal Revenue (BIR) data.

In contrast, wage earners have contributed more than 60 percent to revenues which has risen over the past three decades.

No absolute figures were provided or were immediately available as of press time.

The Duterte administration is submitting the first of four packages comprising its comprehensive tax reform program to Congress over the next two weeks for approval.

Aside from it, separate measures to relax the bank secrecy law and make tax evasion a predicate crime of money laundering are also being threshed out, Alvarez said.

These bills, she said, aim to give more power to the BIR to look into bank accounts of those with pending tax evasion cases, without the need to ask for separate permission from the courts.

“The Bureau of Internal Revenue, however, cannot fully audit them because of existing bank secrecy laws,” Alvarez said.

“In relaxing bank secrecy laws, we want to cover all types of accounts, whether they pertain to deposits or investments, or to peso and dollar accounts,” she said.

The same case is being eyed on plans to amend the country’s dirty money laws.

“We also want to include the crime of tax evasion as a predicate crime to money laundering, so we can catch the big tax evaders and haul them to court,” the spokesperson said.

Similar moves to ease bank secrecy and tighten money laundering laws have failed during the latter part of the previous administration, which has rejected outright lowering of income levies without offsetting potential revenue losses.

President Duterte has made it his campaign promise to bring down income taxes to a high of 25 percent from 32 percent for individuals, and to 25 percent from 30 percent for corporations.

According to initial figures which may still be revised, the comprehensive tax reform plan is estimated to generate net additional revenues of P368 billion by 2019.

“From now until the end of the month, we are conducting a series of consultations to further refine this proposal,” Finance Secretary Carlos Dominguez was quoted as saying in a separate statement.

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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