The House committee on ways and means has passed a substitute bill granting amnesty in the payment of estate taxes.
The panel chairman, Quirino Rep. Dakila Carlo Cua, spearheaded the passage of the unnumbered bill, which replaced House Bill 1889 authored by Rep. Arthur Defensor Jr. of Iloilo and HB 3010 by Deputy Speaker Miro Quimbo of Marikina, both titled “An Act Granting Amnesty in Estate Tax.”
The 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 states.
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.
The tax amnesty is being sought because the Bureau of Internal Revenue’s estate tax collection is insignificant compared to the overall tax take, Defensor explained.
Defensor said the amnesty is an administrative cleanup measure because “there are so many properties tied to unsettled estate taxes, 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, the House deputy majority leader.
Quimbo explained the bill seeks to ensure that 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.
