Amnesty on estate tax hurdles House of Representatives

Amnesty on estate tax hurdles House of Representatives (Photo: House of Representatives of the Philippines/Facebook)

MANILA—The House of Representatives’ ways and means committee has passed a substitute bill that seeks to grant amnesty in the payment of estate taxes.

Committee chairman, Rep. Dakila Carlo Cua (Lone District, Quirino), spearheaded the passage of the unnumbered bill which substituted House Bill 1889 authored by Rep. Arthur Defensor Jr. (3rd District, Iloilo) and HB 3010 by Deputy Speaker and Marikina City Second District Rep. Romero “Miro” Quimbo, both titled “An Act Granting Amnesty in Estate Tax”.

The substitute bill seeks to increase tax collection levels by granting amnesty in the payment of unsettled estate taxes and to promote the settlement of estates. The amnesty would free-up properties of unsettled estates, with the end goal of generating financial transactions and stimulating economic activity.

The bill provides that the tax amnesty shall cover estate taxes for taxable year 2016 and for prior years that have remained unpaid as of Dec. 31, 2016.

It grants the following immunities and privileges to taxpayers who avail of the tax amnesty: (1) immunity from the payment of estate taxes, civil, criminal, or administrative penalties; (2) the taxpayer’s Estate Tax Amnesty Returns for 2016 and prior years shall not be admissible as evidence in all judicial, quasi-judicial, or administrative proceedings; and (3) the books of accounts and other records of the taxpayer for the years covered by the estate tax amnesty availed of shall not be examined.

Defensor explained the tax amnesty is being sought because the collection of the Bureau of Internal Revenue (BIR) on estate tax is insignificant, compared to the overall tax collection.

He said the amnesty is an administrative clean-up measure because there are so many properties tied-up to unsettled estate tax, which can reach billions of pesos and which have become idle capital.

“If these properties are sent back to commercial circulation and are made subject to transaction, such as sale, lease, or joint venture, in the long run, they can generate more taxes,” said Defensor, a Deputy Majority Leader.

Quimbo elucidated that the bill seeks to ensure the “properties that are caught in a bind, not being utilized and are not being part of the economy, because estate taxes have remained unpaid, are brought back to commercial circulation”.

“The primary cause of the inability to settle estate tax is due to high estate tax rates and secondly, the inability to cope with the penalties that have accrued. In 95 percent of the cases, the penalties are even higher than the value of the properties,” said Quimbo.

Aside from Quimbo, Defensor and Cua, the other authors of the substitute bill are Reps. Arlene Arcillas (1st District, Laguna), Rose Marie “Baby” Arenas (3rd District, Pangasinan), Lianda Bolilia (4th District, Batangas), Winston “Winnie” Castelo (2nd District, Quezon City), Eugene Michael de Vera (Party-list, ABS), Jesulito Manalo (Party-list, ANGKLA), Xavier Jesus Romualdo (Lone District, Camiguin), Jose Antonio Sy-Alvarado (1st District, Bulacan), and Manuel Antonio Zubiri (3rd District, Bukidnon).

Relatedly, the committee during the same hearing, approved a substitute bill proposing a single tax rate of 6 percent on estates based on the value of the net estate. This would be done by amending Section 84 of the National Internal Revenue Code (NIRC) of 1997, as amended.

Cua said the objective of the bill is to reduce the existing estate tax rate and ensure fair taxation.

The bill substituted House Bills 458, 3311, 3528, 3794 and 4394 filed respectively by Reps. Jesulito Manalo (Party-list, ANGKLA), Juliette Uy (2nd District, Misamis Oriental), Angelina Tan (4th District, Quezon Tan), Rosenda Ann Ocampo (6thDistrict, Manila), and Evelina Escudero (1st District, Sorsogon).