By Paolo Romero (The Philippine Star) | Updated August 24, 2016 - 12:00am
MANILA, Philippines – The Senate Ways and Means Committee will prioritize the estate tax reform proposal of the Duterte administration by easing the “tax burden on a deceased’s assets in order to lighten the grief of the heirs,” Sen. Juan Edgardo Angara said.
Angara said the estate tax rates would be reduced and the tax-deductible expenses – such as medical expenses incurred by the deceased – would be increased.
An estate tax is imposed on the transfer of a decedent’s estate to his lawful heirs and beneficiaries based on the fair market value of the net estate at the time of the decedent’s death.
“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,” the senator said.
“This 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 are not maximized,” he said.
Angara gave assurance the committee would be adopting an “una ang pamilya (family first)” philosophy by setting rules that are easy to comply with and adopt rates that are affordable.
Angara filed Senate Bill 980, which incorporates the estate tax reforms he is advocating.
Foremost of these is adjusting the 1997-era estate rates to inflation which would result in doubling the tax-exempt values.
The bill mandates a resetting of rates every three years, with inflation as basis “so that it will not take us 20 years to readjust the rates.”
In computing the estate tax, Angara also proposed that the standard deduction be increased from P1 million to P2 million.
In addition, a family home will not be taxed if it is valued at P2 million, double the present threshold of P1 million.
Heirs can also charge to the estate medical expenses of up to P1 million and funeral expenses of up to P500,000, in recognition, “of the high cost of dying, he said.
The measure also allows an authorized heir or estate administrator to withdraw P200,000 from the bank deposits of the deceased.
“By lowering the compliance hurdle for what is essentially an inheritance tax, tax clearances, which are a requirement, for, let us say, a real property’s sale, will now be expedited resulting in the asset’s commercial exploitation,” he said.
This will be good for the heirs as they can now enjoy the assets, Angara said, adding that the government is also expected to benefit because collections will increase.
Official records show that only seven in every 100 deaths in the country settle estate taxes while payment of the latter accounts for one-sixth of one percent of total Bureau of Internal Revenue collections.
At present, a net estate, amounting to P200,000, which is the lowest in the estate tax brackets, is exempt from estate taxes.
The top-tier covers estate with a value of P10 million and over which has a tax due of P1,215,000 plus 20 percent of the amount in excess of P10 million.
Meanwhile, Senate Minority Leader Ralph Recto asked Malacañang to first issue implementing rules and regulations (IRR) the new laws on persons with disabilities and balikbayan boxes before pitching new taxes.
Recto was referring to the IRRs for the law granting tax breaks and other benefits for persons with disabilities (PWDs) and those of another law raising the tax-exempt value of balikbayan boxes.
He said releasing the long-delayed IRR of Republic Act 10754 would allow its provisions to be enjoyed by millions of PWDs.
RA 10754 exempts PWDs from all sales taxes on certain goods and services, like transport fares, medicines, medical and dental services and laboratory fees, raising the total discount to 32 percent.
It also grants a P25,000 annual income tax deduction to relatives within the fourth civil degree of consanguinity or affinity, who are caring for and living with a PWD.
Although signed by then President Benigno Aquino III last March 23 or almost five months ago, the law’s implementation has been stymied by the lack of the implementing rules.
Recto said Malacañang should order the IRR’s immediate release “before conspiracy theorists go to town with the speculation that its release is being delayed to pave the way for the reported delisting of PWD privileges” in the tax reform package it would unveil soon.
Another law facing the same predicament of “being effectively frozen by red tape” is RA 10863, the Customs Modernization and Tariff Act, which raises the tax-exempt value of balikbayan boxes and other personal belongings shipped home by overseas Filipino workers (OFWs).
Signed by Aquino on May 30 this year, the law allows OFWs to send up to three P150,000 worth of tax-and duty-free balikbayan boxes in a year, provided that the goods are not in commercial quantities nor intended for barter of sale.
posted August 15, 2016 at 11:00 pm by Gabrielle H. Binaday
[ the standard.com.ph ]
The Finance Department plans to lower the estate tax to an across-the-board 6 percent to ease the burden of taxpayers and improve the government’s tax collection efficiency.
Finance Secretary Carlos Dominguez III told reporters in a recent interview the lower estate tax was part of a tax reform plan to be submitted to Congress by the end of September.
“We charge up to 20 percent for estate taxes and quite frankly we know... most of the lands were still in the name of the people’s grandfathers because they do not want to transfer it because they do not want to pay the 20 percent [estate tax],” Dominguez said.
The Bureau of Internal Revenue earlier defined estate tax as the tax on the right of the deceased to transmit his or her estate to the lawful heirs at the time of death. It is not a tax on property, but a tax imposed on the privilege of transmitting property upon the death of the owner.
The BIR website said the highest amount of estate tax to be be paid is P1.215 million plus 20 percent in excess of P10 million, if the net estate is P10 million or higher.
By Prinz Magtulis (The Philippine Star) | Updated August 2, 2016 - 12:00am
MANILA, Philippines - Easier business application to print receipts, registration of books and point-of-sale or POS machines could be next in line in the Bureau of Internal Revenue (BIR)’s thrust to ease tax transactions.
“We discussed secondary business registration considering the President’s order to make them easier,” BIR deputy commissioner Nelson Aspe said in a phone interview.
While declining to provide details, Aspe said more reforms to “speed up” tax dealings could be expected in the coming days “since we also want taxpayers to be encouraged to pay.”
Secondary registration pertains to registration of book of accounts, application for authority to print receipts and invoices, use or cash register machine or POS and computerized accounting systems.
Aspe attended the second meeting on streamlining business registration last July 27, which followed earlier orders by BIR commissioner Caesar Dulay to speed up issuances of tax documents.
So far, Dulay has ordered for a one-day processing of tax clearances and five days for certificate authorizing registration. The original for the latter was five to 10 days.
He had also vowed to issue within the day of application international special and general carriers certificates.
Finance Secretary Carlos Dominguez said easing tax payment methods could encourage people to pay more and lead to increase revenues.
“There must be a way to eliminate the long lines at the BIR offices. Why punish our clients when they have come to pay?,” he said in his speech marking BIR’s 112th anniversary yesterday.
“We can have cleaner, airier and more welcoming offices, for instance...Let the taxpayers breather. You are collecting their money after all,” he added.
These, in turn, are expected to widen the tax base which would offset revenue losses from lower income taxes, without the necessity to raise value-added tax to 14 percent.
“We are still discussing with the House (of Representative) how to proceed (with the tax reform),” Dominguez said.
House Speaker Pantaleon Alvarez has not replied to queries of press time. Tax proposals should emanate from the Lower House by law.
For his part, Senate President Koko Pimentel vowed to support legislative measures that would help BIR “boost its morale” to collect more taxes.
“The new Senate leadership would study the proposal to exempt BIR (employees) from SSL (Salary Standardization Law),” he said in a separate speech.
BIR is the government’s main revenue agency, which accounts for roughly 80 percent of state revenues.
Before the Duterte administration took over, the agency has collected P783.4 billion as of June, up 11 percent year-on-year.
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.