Tax Articles

As you may be aware, the Tax Amnesty Act of 2019 was signed into law in February 2019, however, then President Rodrigo Duterte vetoed the provisions on general tax amnesty allowing only the estate tax amnesty provisions to proceed.

Now, in an attempt to revive the stalled general tax amnesty during the past administration, Senator Win Gatchalian has recently introduced Senate Bill No. 60 aimed at giving delinquent taxpayers a fresh start by giving them an opportunity to settle their unpaid and outstanding tax liabilities amicably.

Under the proposal, the tax amnesty shall cover all unpaid national internal revenue taxes such as but not limited to income tax, withholding tax, capital gains tax, donor's tax, value-added tax, other percentage taxes, excise tax and documentary stamp tax administered by the Bureau of Internal Revenue (BIR), including value-added tax and excise taxes being administered by the Bureau of Customs for taxable year 2024 and prior years. Taxpayers can avail the tax amnesty, with or without assessments duly issued therefor.

The amnesty shall not cover a) withholding tax agents who withheld taxes but failed to remit the same to the BIR; b) taxpayers with pending court cases involving graft and corrupt practices, anti-money laundering, tax evasion, illegal exactions, malversation of public funds and property, etc; c) tax cases that have become final and executory; and d) delinquencies and assessments that have become final and executory. It shall not also cover estate tax.

Similar with other tax amnesties in the past, the grant of tax amnesty under the proposed bill is not free at all. The availing taxpayer will have to pay an amount equivalent to, at the option of the taxpayer, either: 1) two percent (2%) of the taxpayer’s total assets as of December 31, 2024; or 2) the higher between an amount fixed in the bill (ranging from P100,000.00 to P1,300,000.00), or five percent (5%) of the taxpayer’s total networth as of December 31, 2024. If the taxpayer opts to pay the amnesty tax based on total networth and the computed networth is negative, the taxpayer may still avail of the benefits of tax amnesty and pay the minimum amnesty tax.

Those who avail of the tax amnesty and fully comply with all the conditions set forth in the bill and upon payment of the amnesty tax shall be, with respect to the years covered by the tax amnesty, immune from the payment of taxes and from all appurtenant civil, criminal, and administrative cases and penalties and from other investigations or suits insofar as they relate to the assets, liabilities, networth, and internal revenue taxes that are subject of the tax amnesty.

Also, any information or data contained in, derived from or provided by a taxpayer in the Tax Amnesty Return, Statement of Total Assets or Statement of Assets, Liabilities, and Networth, as the case may be, shall be confidential in nature and shall not be used in any investigation or prosecution before any judicial, quasi-judicial, and administrative bodies. However, the taxpayer may use this as a defense, whenever appropriate, in cases brought against the taxpayer. The availment of the amnesty does not imply any admission of criminal, civil or administrative liability of the availing taxpayer.

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 BIR but the Commissioner of Internal Revenue may authorize in writing the examination of the said books of accounts and other records to verify the validity or correctness of a claim for any tax refund, tax credit (other than refund or credit of taxes withheld on wages), tax incentives, and/or exemptions under existing laws.

Upon full compliance with all the conditions set forth in the proposed law and payment of the corresponding general amnesty tax, the tax amnesty granted shall become final and irrevocable.

I hope this proposal will be passed into law. We already have estate tax amnesty, availment of which had just ended. We also have currently in effect the amnesty on unpaid real property tax pursuant to Republic Act 12001, or the Real Property Valuation and Assessment Reform Act. Perhaps, now is also the right time to grant tax amnesty on unpaid local business taxes to give taxpayers as well the opportunity to reset their business relations with the local government units and have a fresh start as a good and law-abiding taxpayer moving forward.