Salient Features of the Tax Amnesty Act of 2019

The Tax Amnesty Act of 2019 or Republic Act No. 11213 was signed into Law on February 14, 2019 with a Veto Message of President Rodrigo R. Duterte. The said Law was published on the Official Gazette on February 18, 2019 and took effect on March 5, 2019, that is, on the 15th day after the official publication. However, as of the writing of this article, the implementing rules and regulations are not yet released which should be published within 90 days from effectivity thereof that will fall due on or before June 3, 2019.

The Vetoed items of the Tax Amnesty Act are the following:

1.) The entire section of the General Tax Amnesty (GTA) under Title III and all related provisions are rejected. The rational behind this veto is that "a general tax amnesty without lifting bank secrecy law, imposing legal framework in compliance with international standards on exchange of information, and penalties versus untruthful declaration of asset or net worth is overgenerous and would proliferate tax evasion." The veto message cites 2006 tax amnesty that did not have safeguards resulting to substantial revenue losses. The president recommends the passing of a general tax amnesty bill that includes safeguards to meet both tax administration and revenue purposes.

2.) Provision allowing one-time declaration and settlement of estate taxes on properties subject of multiple unsettled estates (Senator Recto’s amendment) are disallowed. To implement one-time settlement across multiple estates would erode the expected revenue of government from estate tax amnesty. The flat rate of 6% estate amnesty tax without penalties imposed at every stage is more than a fair imposition on the privilege. As a result, the unsettled estate taxes of the previous decedents shall be resolved first before the title of the property or properties are transferred to the ultimate heirs.

3.) Provision raising presumption of correctness of the estate tax amnesty returns are rejected. An erroneous valuation would affect both revenue and subsequent transfers. There must be an opportunity to evaluate truthfulness of declarations made by the taxpayers, otherwise implementing agencies would be “stamping pads of approval".

In effect, the Tax Amnesty Act is left with the following features:

1.) Amnesty on Estate Tax
2.) Amnesty on Tax Delinquencies
3.) Confidentiality of Tax Amnesty Returns and SALN
4.) Penalties on exchange and unlawful divulgence of information
5.) Creation of Information Management System
6.) Creation of Congressional Oversight Committee

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Amnesty on Estate Tax
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The coverage of the of the Estate Tax Amnesty are the estates of decedents who died on or before December 31, 2017 with or without assessment  whose Estate Taxes have remained unpaid or have accrued as of December 31, 2017. If an Estate Tax return was previously filed, the Estate Tax amnesty will be based on the net undeclared asset.

The amnesty rate is 6% of the net estate at the time of death. However, the minimum amnesty tax should be P5,000.00 to be filed by the executor or administrator or heirs, transferee or beneficiaries. The availment period is within two (2) years from the effectivity of the rules and regulations.

Inorder to avail the Estate Tax Amnesty, one should apply for it using the following minimum required documents:

•  Estate Tax Amnesty Return
• Acceptance Payment Form
• Certificate of Availment of Estate Tax Amnesty
• Proof of settlement of estate (Judicial or Extrajudicial)

If the Extate Tax Amnesty are properly filed and complied, the estate will enjoy the following immunities:

1.) Immune from the payment of all Estate Taxes
2.) Immune from any increments and additions thereof, arising from the failure to pay any and all Estate Taxes for taxable year 2017 and prior years
3.) Immune from all appurtenant civil, criminal, and administrative cases and penalties under the National Internal Revenue Code of 1997, as amended.

Upon full compliance with all the conditions and payment of the corresponding state amnesty tax, the tax amnesty shall become final and irrevocable.

However, the Estate Tax Amnesty has the following EXCEPTIONS:

1.) Shall not extend to Estate Tax cases which have become final and executory

2.) Shall not extend to properties involved in cases pending in appropriate courts:

• Falling under the jurisdiction of the Presidential Commission on Good Government; and

• Involving unexplained or unlawfully acquired wealth under RA No. 3019 (Anti-Graft and Corrupt Practices Act) and RA No. 7080 (An Act Defining and Penalizing the Crime of Plunder);

• Involving violations of RA No. 9160 (Anti-Money Laundering Act, as amended);

• Involving tax evasion and other criminal offenses under Chapter II of Title X of the NIRC of 1997, as amended; and

• Involving felonies of frauds, illegal exactions and transactions, and malversation of public funds and property under Chapter III and IV of Title VII of the Revised Penal Code.


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General Tax Amnesty
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The provisions of the General Tax Amnesty are VETOED and DELETED.

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Amnesty on Tax Delinquencies
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The implementing rules and regulations of the Amnesty on Tax Delinquencies are still on process as of the writing of this article. A proposed revenue regulation was released for public viewing and comments on this matter (see BIR website).

The following are the tax amnesty rate for tax delinquencies stated on the Act:

a) Delinquencies and assessments, which have become final and executory, including delinquent tax account, where the application for compromise has been requested on the basis of: (1) doubtful validity of the assessment; or (2) financial incapacity of the taxpayer, but the same was denied by the Regional Evaluation Board or the National Evaluation Board, as the case may be, on or before the Implementing Rules and Regulations take effect;		Tax Amnesty Rate: 40% of the basic tax assessed
b) Pending criminal cases with the Department of Justice or the courts for tax evasion and other criminal offenses under Chapter II of Title X and Section 275 of the National Internal Revenue Code of 1997, as amended, with or without assessments duly issued;		Tax Amnesty Rate: 60% of the basic tax assessed
c) Tax cases subject of final and executory judgment by the courts on or before the Implementing Rules and Regulations take effect; and		Tax Amnesty Rate: 50% of the basic tax assessed
d) Withholding tax agents who withheld taxes but failed to remit the same to the Bureau of Internal Revenue.		Tax Amnesty Rate: 100% of the basic tax assessed

The availment period of this amnesty is within one (1) year from the effectivity of the rules and regulations. In order to avail the Amnesty on Tax Delinquencies, one should apply for it using the minimum required documents:

• Tax Amnesty on Delinquencies Return
• Certificate of Delinquency
• Acceptance Payment Form
• Certificate of Availment

If the Tax Amnesty on Delinquencies are properly filed and complied, the taxpayer will enjoy the following immunities:

1.) Delinquencies are considered settled and the criminal case and its corresponding civil or administrative case, if applicable, be terminated

2.) Shall be immune from all suits or actions, including the payment of said delinquencies or assessment, as well as administrative cases, and penalties under the NIRC of 1997

3.) Any notices of levy, attachments and/or warrants of garnishment issued against the taxpayer
shall be set aside pursuant to a lifting of notice of levy/garnishment duly issued by the BIR or its authorized representative

4.) Authority to Cancel Assessment (ATCA) shall be issued by the BIR within fifteen (15) calendar days from submission to the BIR of the Acceptance Payment Form and the Tax Amnesty on Delinquencies Return

5.)  Upon full compliance with all the conditions set forth in the law and payment of the corresponding tax on delinquency, the tax amnesty shall become final and irrevocable.



Confidentiality of Tax Amnesty Return and SALN

Any information or data contained in, derived from or provided by a taxpayer in the Tax Amnesty Return, SALN and the appurtenant documents shall be confidential in nature and shall not be used in any investigation or prosecution before any judicial, quasi-judicial, and administrative bodies. Any SALN, information sheets, and any such other statements or disclosures that may have been previously submitted by the taxpayer are deemed to have been amended by the Tax Amnesty Return and/or the SALN.


Penalty Clause

1.)  Sec 270 of Tax Code – Unlawful Divulgence of Information. – Except as provided in Sections 6(F) and 71 of this Code and Section 26 of Republic Act No. 6388

…. upon conviction for each act or omission, be punished by a fine of not less than Fifty thousand pesos (P50,000) but not more than One hundred thousand pesos (P100,000), or suffer imprisonment of not less than two (2) years but not more than five (5) years, or both.

2.)  Sec 24 of the Amnesty Act - Unlawful Divulgence of Tax Amnesty Return and Appurtenant Documents

…. Any person…..shall be penalized a fine of One hundred fifty thousand pesos (P150,000) and imprisonment of not less than six (6) years but not more than ten (10) years.

3.) If the offender is an officer or employee of the BIR or any government entity, the penalties under Section 270 (Tax Code) shall apply with additional penalty of perpetual disqualification to hold public office.