Tax Amnesty Act 2019

The President signed the Tax Amnesty Act on February 14, 2019 granting Estate Tax Amnesty and Tax Amnesty on Delinquencies but vetoing the General Tax Amnesty.

The Estate Tax Amnesty covers estates of decedents who died on or before December 31, 2017. The rate is 6% of decedent’s total net estate at the time of death, unless an estate tax return was previously filed, in which case the 6% rate shall be based on net undeclared estate. Those who wish to avail themselves of the Estate Tax Amnesty must file a sworn Estate Tax Return and pay the amnesty tax within two years from effectivity of the Implementing Rules and Regulations (IRRs).

The Estate Tax Amnesty excludes final and executory estate tax cases or properties involved in litigation: (a) with the Presidential Commission on Good Government; (b) for unexplained or unlawfully acquired wealth under the Anti-Graft and Corrupt Practices Act or Plunder; (c) the Anti-Money Laundering Act; (d) tax evasion or other criminal offenses under the Tax Code; or (e) felonies or frauds, illegal exactions and transactions, and malversation of public funds and property under the Revised Penal Code.

The Tax Amnesty on Delinquencies shall cover all national internal revenue taxes collected by the Bureau of Internal Revenue and includes value-added tax and excise taxes collected by the Bureau of Customs for taxable 2017 and prior years. Any person, natural or juridical, who wishes to avail himself of the Tax Amnesty on Delinquencies must file the Tax Amnesty on Delinquencies Return and pay the amnesty tax within one year from effectivity of the IRRs.

The Tax Amnesty on Delinquencies includes: (a) final and executory delinquencies and assessments where the compromise application for doubtful validity of assessment or financial incapacity was denied before the effectivity of the IRRs; (b) criminal cases for tax evasion or other criminal offenses pending with the Department of Justice or the courts; (c) taxes cases whose final and executory judgments were issued by the courts on or before the IRRs take effect; and (d) withholding tax agents who withheld but failed to remit taxes to the BIR.

The tax amnesty rate for each of the delinquency cases is 40%, 50%, 60% and 100% respectively of the basic tax due.

Full compliance with the conditions set forth in the Act shall entitle the taxpayer to, among others, immunity from payment of all taxes due including increments and additions arising from non-payment, and immunity from civil, criminal and administrative cases and penalties under the Tax Code.

The President vetoed the General Tax Amnesty until Congress lifts bank secrecy for fraud cases, provides automatic exchange of information, and includes safeguards to ensure that asset or net worth declarations are truthful. The Department of Finance in coordination with the Commissioner of Internal Revenue must promulgate and publish the IRRs within 90 days from effectivity of the Act (15 days from publication in the Official Gazette on February 18, 2019).

Full copy of the Tax Amnesty Act is available here, while the President’s Veto Message can be viewed here.