Tax Amnesty Bill awaits Duterte’s OK

With the ratification by Congress before it adjourned for the Christmas break, the measure is now on President Duterte’s desk for signing.                                                                                                       Edd Gumban
Paolo Romero (The Philippine Star) - December 26, 2018 - 12:00am 
MANILA, Philippines — The Tax Amnesty Bill is one step closer to becoming a law after the Senate and the House of Representatives ratified the measure generally viewed as a “win-win” for taxpayers and the government, which is expected to generate at least P41 billion in additional revenues.

With the ratification by Congress before it adjourned for the Christmas break, the measure is now on President Duterte’s desk for signing.

The bill grants those who have failed to pay for taxable year 2017 and prior years a one-time opportunity to settle tax obligations, including estate taxes, general taxes and delinquent accounts.

The government is expected to raise up to P41 billion, which will be used to finance crucial infrastructure projects and augment appropriations needed for the social mitigating measures under the Tax Reform for Acceleration and Inclusion or TRAIN law. 

At least P500 million from the proceeds will be used exclusively for establishing a tax database.

“This is but another step in the long quest toward an efficient and equitable tax system,” said Sen. Sonny Angara, chairman of the ways and means committee.

Angara added that the two chambers have agreed to make the tax amnesty bill “pro-taxpayer” that would attract “ordinary citizens who have long wanted to come clean but feared prosecution to finally settle their arrears.”

For general tax amnesty, the bicameral conference committee agreed that taxpayers would be given the option to choose the rate between two percent of total assets or five percent of net worth or a minimum tax.

“This will give taxpayers more flexibility, which would encourage them more to avail of the amnesty,” Angara said.

Taxpayers can also avail themselves of a reprieve from all estate taxes and instead pay six percent based on the decedent’s total net estate.

The tax will benefit families who have idle properties because of years of unpaid estate taxes, resulting in huge penalties and surcharges while use of assets is not maximized.

“With the amnesty, heirs can now enjoy the assets that will be freed for development,” Angara said.

The bill also covers an amnesty on delinquencies. Taxpayers can avail themselves of 40 percent of the basic tax for delinquencies and assessments, which have become final and executory, 50 percent for cases subject of final and executory judgment by the courts and 60 percent for those subject of pending criminal cases.

Taxpayers will be given a year from the issuance of the implementing rules and regulations to avail themselves of the amnesty, except for estate tax amnesty where taxpayers will be given two years. Discounts will be granted for early availers.

Those who avail themselves of the amnesty program will be immune from payment of all taxes and the filing of civil, criminal and administrative cases and penalties.

Any information and data provided shall be confidential and shall not be admissible as evidence in any proceeding. Also, the books of accounts and other records of the taxpayer for the years covered by the tax amnesty availed of shall not be examined by the Bureau of Internal Revenue.

With tax evasion cases taking decades to be decided in clogged courts, with the expenses to investigate, prosecute and hear greater than the taxes sought to be paid, Angara said “an amnesty, in many instances, could yield bigger amounts than the prosecution route.”

Angara said unlawful divulgence of tax amnesty return and supporting documents has corresponding penalties under the bill.

A fine of P150,000 and a maximum jail term of 10 years await violators from the private sector.

If the violation is committed by a government official or employee, the penalties are fine of up to P1 million, maximum jail term of five years and perpetual disqualification from holding public office.

Filinvest-JG Summit’s Clark airport bid to be endorsed to NEDA

[ bworldonline.com ]

THE Department of Transportation (DoTr) said it will endorse the North Luzon Airport Consortium’s (NLAC) bid to take over the operations and management of Clark International Airport to the National Economic and Development Authority (NEDA) next week.

“Meron nang nanalo doon eh. Isu-submit na namin sa Wednesday. Yung grupo ng Changi airport… Isu-submit sa NEDA [A group already won the bidding. We’ll submit it on Wednesday. It’s the group of Changi airport. We’ll submit to NEDA],” Transportation Secretary Arthur P. Tugade told reporters on Friday when asked for updates on the Clark Airport O&M bidding.

NLAC is comprised of Gotianun-led Filinvest Development Corp., Gokongwei’s JG Summit Holdings, Inc., Philippine Airport Ground Support Solutions, Inc. and Changi Airport Philippines.

The Bases Conversion and Development Authority (BCDA) qualified two bid submissions on Nov. 9 for the 25-year concession period to operate the airport.

Aside from NLAC, the X-Droid Consortium, formed by Indonesia’s Angkasa Pura II, Michael L. Romero’s Globalport 900, Inc., Alfredo M. Yao’s Mazy’s Capital, Inc. and Desco, Inc. submitted a bid.

In the opening of technical documents on Nov. 19 and of financial documents on Nov. 27, both live streamed on the Facebook page of BCDA, only NLAC’s submissions were opened. Its financial bid promised an 18.25% percentage share of gross revenue to the government, above the minimum requirement which is 10%.

X-Droid’s submissions were not opened, without providing explanations why. A BCDA representative told BusinessWorld on Friday it cannot issue a statement on the developments of the bidding until the whole process is complete.

Based on Sections 9.1 and 9.3 of the Build-Operate-Transfer Law, a bidder is subjected to direct negotiation with the NEDA Investment Coordination Committee if it is the only participant left compliant to bid requirements.

Special Bids and Awards Committee (SBAC) Chairperson Joshua M. Bingcang said last month the awarding of the O&M contract is targeted this December. — Denise A. Valdez

Bourse operator creates real estate subsidiary

THE Philippine Stock Exchange, Inc. (PSE) will establish a new subsidiary that will handle its real estate assets, including its old office in Ayala Avenue, Makati City. 

In a disclosure posted on Thursday, the PSE said its board of directors has approved the incorporation of PSE Realty, Inc. (PRI). The wholly-owned unit will have a capitalization of P1 billion, of which P701.80 million will be subscribed and paid-up. 

The PSE earlier said that it can either sell the office spaces in Ayala Tower One or rent them out instead. 

The bourse operator moved out of its office in Ayala Tower One last February, in favor of the new PSE tower along Bonifacio High Street. The new building stands 26-storeys high and has a gross leasable area of 30,000 square meters. Aside from the PSE, the building also houses more than 100 active trading participants. 

The PSE has already sold its old office, the PSE Tektite Building in Ortigas Center, to Philippine Realty Holdings Corp. (Philrealty) for P257.18 million in August last year. Philrealty was the developer of the Tektite Building. — Arra B. Francia

Comprehensive tax amnesty just a step away from enactment

THE PLANNED TAX AMNESTY program is now up for signing by President Rodrigo R. Duterte after the House of Representatives and the Senate ratified the measure on Wednesday and Thursday, respectively.

The program will provide a one-time legal relief for those with unpaid taxes for years up to 2017.

It seeks to broaden the country’s tax base and reduce administrative costs of the Bureau of Internal Revenue and courts that could otherwise be clogged with tax evasion cases.

The measure — which imposes an amnesty charge equivalent to a portion of the taxpayers’ outstanding unpaid taxes in exchange for immunity from civil, criminal and administrative penalties — covers unpaid estate tax that is collected by local governments, unpaid national taxes as well as national tax delinquency in specific circumstances.

Taxpayers will be given a year from issuance of implementing rules and regulations to avail of amnesty, except in the case of estate tax amnesty where interested parties will be given two years to avail. Discounts will be given to early availers.

For estate taxes, the amnesty charge is six percent based on decedents’ total net estate at the time of death declared in the estate tax amnesty return.

The general tax amnesty will charge a two percent rate based on total assets declared in a statement of assets, liabilities and net worth to be filed as part of the amnesty application, or five percent if the applicant were to opt for net worth as base or P75,000-P1 million, “whichever is higher”.

The general tax amnesty covers all national internal revenue taxes such as, but not limited to income tax, withholding tax, capital gains tax, donor’ tax, value-added tax, other percentage taxes, excise tax, and documentary stamp taxes collected by the BIR and the Bureau of Customs.

The amnesty on estate and other internal revenue taxes excludes those with pending cases with the Presidential Commission on Good Government, those involving unlawfully acquired wealth under the Anti-Graft and Corrupt Practices Act, violations of the Anti-Money Laundering Law, pending criminal cases for tax evasion and related charges, those involving felonies of frauds, illegal exactions and transactions, and malversation of public funds, and tax cases that have been final and executory.

The measure also includes an amnesty on tax delinquent accounts in specific circumstances, subject to a charge of 40-100% of the basic tax assessed depending on the circumstances.

These amnesty on delinquencies can be availed of in cases that have become final and executory where application for compromise has been requested due to doubtful validity of the assessment and the claim of financial incapacity of the taxpayer was denied by the Regional Evaluation Board or the National Evaluation Board composed of BIR officials on the day or before the implementing rules and regulations (IRR) of the amnesty program take effect.

Among others, the amnesty program on tax delinquencies also covers cases subject of final and executory judgment by courts on the day or before the IRR take place, as well as those involving withholding tax agents who withheld taxes but failed to remit to the BIR.

The final version ratified by Congress did not contain measures to relax bank secrecy restrictions and the automatic exchange of tax information (AEoI) with foreign institutions that were deemed crucial to verifying amnesty applicants’ declarations.

Lawmakers and tax experts argued that the said administrative measures violate the constitutional provision that a law must only have only one subject matter, but officials of the Finance department (DoF) have argued that these provisions are integral to an effective tax amnesty program.

Although the main objective is to grow the tax base, the DoF expects the tax amnesty program to generate P41 billion in additional revenue, and only P26 billion without the easing of bank secrecy and the AEoI. — Elijah Joseph C. Tubayan

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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