SENATOR Ralph Recto is pushing a measure seeking an amnesty to expand the tax base by luring untaxed individuals or those with outstanding liabilities to settle these without fear of being slapped with criminal charges.
Recto filed Senate Bill 920 as a prelude, according to him, to the tax reform the present administration is set to pursue as it will give taxpayers with arrears an opportunity to come up with a clean slate and begin paying the correct taxes.
He said the tax amnesty program would allow many people to surface and put their tax papers in order without fear of prosecution.
“These law-abiding citizens would have stepped forward a long time ago if not for complexity of the current tax system,” Recto said, specifically referring to “small businessmen and self-employed professionals” who find the bureaucratic hurdle “too high, too often or too costly” to comply with.
Another thing which is dissuading these hardworking individuals is the worry that their voluntary offer to settle past dues, instead of being met with understanding, will be reciprocated with severe penalties, Recto said.
“The provision for immunity from civil, criminal and administrative penalties to be granted to erring taxpayers will encourage those operating in the underground economy to legitimize their business operations,” Recto said.
Under the proposal, the tax amnesty will cover all national internal revenue taxes for the taxable year 2015 and prior years, with or without tax assessments.
The amnesty, however, will not cover those with pending cases involving unexplained or unlawfully acquired wealth, or under the Anti-Graft and Corrupt Practices Act.
Persons charged with violating the Anti-Money Laundering Law will also not be allowed to apply for amnesty.
Also not included are “withholding agents with respect to their withholding tax liability, those with pending cases falling under the jurisdiction of the Presidential Commission on Good Government, and tax cases subject to final and executory judgment by the courts.”
Those with pending criminal cases for tax evasion and other criminal offenses under certain sections of the tax code, and the felonies of frauds, illegal exactions and transactions, and malversation of public funds and property are also banned from seeking amnesty.
Under SB 920, “any person, natural or juridical, who wishes to avail himself of the tax amnesty shall file with the Bureau of Internal Revenue a notice and Tax Amnesty Return accompanied by a Statement of Assets, Liabilities and Networth as of Dec. 31, 2015.”
The tax due shall then be based on the net worth—assets minus liabilities—declared in the SALN.
For individuals, “whether resident or non-resident citizens, including resident or non-resident aliens, trusts and estates, “the tax shall be five percent of the net worth but not less than P50,000.”
The rates of corporations are based on the subscribed capital.
An example in the proposed brackets is a corporation with at least P50 million subscribed capital will pay five percent of its net worth or P500,000, whichever amount is higher.
Assets in the SALN cover those “within or without the Philippines, whether real or personal, tangible or intangible, whether or not used in trade or business.”
Existing liabilities, on the other hand, pertain to obligations which “are legitimate and enforceable, secured or unsecured, whether or not incurred in trade or business.”
Recto also included a section stating the “presumption of correctness of the SALN,” with the latter considered as true and correct except where the amount of declared net worth is understated to the extent of 30 percent.”
But such proceedings to establish under-declaration, Recto said, “must be initiated within one year following the date of the filing of the Tax Amnesty Return.”
Any person who willfully understates his net worth by at least 30 percent shall, upon conviction, be subject to the penalties of perjury under the Revised Penal Code.
“The willful failure to declare any property in the SALN or in the Tax Amnesty Return shall be deemed a prima facie evidence of fraud and shall constitute a ground upon which attachment of such property may be issued in favor of the BIR to answer for the satisfaction of any judgment that may be acquired against the declarant,” reads a provision in Recto’s bill.
Once a general amnesty is declared, the grant of tax amnesty, in whatever manner and form, shall not be allowed. The moratorium applies, according to Recto’s bill, to any administrative tax amnesty by the BIR.
“This is a ‘one time, big time’ amnesty. Those in arrears should not miss this bus,” he said.
A SALN approach, Recto said, will greatly contribute to the government’s effort to organize taxpayers’ records and information.
“By creating a large database of taxpayers, this proposed measure could greatly help the government in its effort to prevent money laundering in the country,” the senator added.