Philippines: DOF supports amnesty for delinquent taxpayers

  • The Department of Finance (DOF) is supporting a new bill seeking to provide delinquent taxpayers a chance for a “clean slate” by granting amnesty for all their unpaid obligations.
  • In an interview, Finance Secretary Carlos Dominguez, as well as Finance Undersecretary Mark Joven, said the DOF is supporting House Bill 7105, or a tax amnesty bill.
  • HB 7105, which was filed by House Speaker Pantaleon Alvarez, majority leader Rodolfo Fariñas, and House Ways and Means chairman Dakila Carlo Cua, aims to enhance revenue administration and tax collection by granting an amnesty on all unpaid internal revenue taxes imposed by the national government.
  • Under the bill, taxpayers who wish to seek for amnesty should pay a rate of eight percent of their net worth covering taxable year 2017, or P10,000 to P10 million – depending on their taxpayer classification – whichever is higher.
  • According to Joven, the tax amnesty bill would provide not only additional revenue, but also a database of taxpayers which would help the government improve its tax collection efficiency.
  • However, Joven said the DOF is still studying if the bill should include pending tax cases, and if it should set the amnesty rate at eight percent of the individual’s net worth.
  • He added the government should also consider an amnesty rate that would ensure higher compliance from delinquent taxpayers.
  • “If you look at the Indonesian example, 8% is slightly on the high side. In addition, based on historical amnesties, the last amnesty we had was a 5% amnesty on net worth and compliance was really low so we need to consider that as well,” Joven said, adding the ideal tax rate could be lower than 8%.
  • A tax amnesty program is part of the Package 1B of the Comprehensive Tax Reform Program (CTRP) the DOF is pushing to supplement the Tax Reform for Acceleration and Inclusion (TRAIN) Act.
  • Aside from tax amnesty, Package 1B involves adjustments in the Motor Vehicle Users Charge and amendments in the bank secrecy law.
  • DOF estimates showed the tax package is seen to increase the government’s revenue by PHP38.9bn, thus resulting in incremental revenue of PHP128.8bn when combined with Package 1A.

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