TAX ALERTS

SPECIAL TAX ALERT

February 2019

 

REPUBLIC ACT NO. 11213

 

“AN ACT ENHANCING REVENUE ADMINISTRATION AND COLLECTION BY GRANTING AN AMNESTY ON ALL UNPAID INTERNAL REVENUE TAXES IMPOSED BY THE NATIONAL GOVERNMENT FOR TAXABLE YEAR 2017 AND PRIOR YEARS WITH RESPECT TO ESTATE TAX, OTHER INTERNAL REVENUE TAXES, AND TAX ON DELINQUENCIES”

 

COMMON PROVISIONS.

RA 11213, which is otherwise known as the “The Tax Amnesty Act” covers taxable year 2017 and prior years. Availment of tax amnesty and issuance of acceptance payment form do not imply any admission of criminal, civil, or administrative liability on the part of the availing estate or taxpayer. Information obtained by the BIR from the amnesty returns and related documents submitted by the taxpayer shall not be used in any investigation or prosecution before judicial, quasi-judicial, or administrative bodies.

 

VETOED PROVISIONS.

On February 14, 2019, RA 11213 was signed into law by Pres. Rodrigo R. Duterte, but with a veto message of several provisions, including the entire Title III on General Tax Amnesty. Pres. Duterte vetoed the following:

 

          (a) Provisions on General Tax Amnesty, under Title III of RA 11213;

          (b) Sec. 2(b), which explains the policy behind the provisions on general tax amnesty;

          (c) Sec. 3(d) and Sec. 3(e), which defines the Statement of Assets, Liabilities, and Networth and Total Asset, respectively;

          (d) The proviso in Sec. 6 allowing a one-time declaration and settlement of estate taxes on properties that are in the name of prior  
                decedents or donors whose estates remain unsettled; and

          (e) The first paragraph of Sec. 7, which provided that the contents of an Estate Tax Amnesty Return is presumed correct.

 

SALIENT FEATURES OF RA 11213.

A table on the salient features of RA 11213 is set out below:

Title II.
Estate Tax Amnesty
Title IV.
Tax Amnesty on Delinquencies
Coverage: • Estate of decedents who died on or before December 31, 2017:
- With or without assessments duly issued therefor,
- Whose estate taxes have remained unpaid or have accrued as of December 31, 2017. (Sec. 4).
• All national internal revenue taxes including value-added tax and excise taxes collected by the Bureau of Customs for Taxable Year 2017 and prior years, specifically:
- Final and executory delinquencies and assessments, 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, as the case may be, on or before the effectivity of the Implementing Rules and Regulations (IRR);
- Pending criminal cases with the Department of Justice (DOJ) or the courts for tax evasion and other criminal offenses under Chapter II of Title X and Sec. 275 of NIRC of 1997, as amended, with or without assessment duly issued;
- Tax cases subject of final and executory judgment by the courts on or before the effectivity of the IRR; and
- Withholding tax agents who withheld taxes but failed to remit to the Bureau of Internal Revenue (BIR). (Sec. 17).
Exclusions: • Estate tax cases that have become final and executory.

• Properties involved in pending cases:
- Falling under the jurisdiction of the Presidential Commission on Good Government;
- Involving unexplained or unlawfully acquired wealth under Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act), and Republic Act No. 7080 (An Act Defining and Penalizing the Crime of Plunder);
- Involving violations of Republic Act No. 9160 (Anti-Money Laundering Act);
- Involving tax evasion and other criminal offenses under Chapter II of Title X of the National Internal Revenue Code (NIRC) of 1997, as amended;
- Involving felonies of frauds, illegal exactions and transactions, and malversation of public funds and property under Chapters III and IV of Title VII of the Revised Penal Code. (Sec. 9).
None stated.
Amnesty Tax Rate and Tax Base: Without previously filed estate tax return:
Six percent (6%) based on the decedent’s total net estate at the time of death (Sec. 5).

With previously filed estate tax return:
Six percent (6%) based on net undeclared estate.

Allowable deductions exceed value of gross estate:
Pay minimum estate amnesty tax of Five Thousand Pesos (Php 5,000.00). (Sec. 5).
Final and executory delinquencies and assessments:
Forty percent (40%) of the basic tax assessed.

Tax cases subject of final and executory judgments by the courts:
Fifty percent (50%) of the basic tax assessed.

Pending criminal cases with criminal information filed before the DOJ or the courts for tax evasion and other criminal offenses under Chapter II of Title X and Sec. 275 of NIRC of 1997, as amended, with assessments duly issued and otherwise excluded in Title II:
Sixty percent (60%) of the basic tax assessed.

Withholding agents who withheld taxes but failed to remit the same to the BIR:
One hundred percent (100%) of the basic tax assessed. (Sec. 18).
Who can file: Executor or administrator of the estate, or in their absence, legal heirs, transferees, or beneficiaries. (Sec. 6).
Natural or juridical persons. (Sec. 19).
What to file: Estate Tax Amnesty Return (Sec. 6).

Revenue District Officer shall issue and endorse an acceptance payment form. (Sec. 6).
Tax Amnesty on Delinquencies Return, together with a Certification of Delinquency. (Sec. 19).

Revenue District Officer shall issue and endorse an acceptance payment form. (Sec. 19).
When to file: Within two (2) years from effectivity of the IRR. (Sec. 6). Within one (1) year from effectivity of the IRR (Sec. 19).
Where to file: Revenue District Office (RDO) with jurisdiction over the last residence of the decedent.

For non-resident decedents, RDO 39 or any RDO as may be prescribed in the IRR. (Sec. 6).
BIR Office that has jurisdiction over residence or principal place of business of the taxpayer. (Sec. 19).
Immunities and Privileges: Immunity from payment of all estate taxes (except estate amnesty tax), and any increments or additions thereto, arising from the failure to pay any and all estate taxes for taxable years 2017 and prior years, and from all appurtenant civil, criminal, and administrative cases and penalties under the NIRC of 1997, as amended. (Sec. 8). Immunity from all suits or actions, including payment of delinquency or assessment (except for tax delinquency amnesty tax) arising thereto, and from all appurtenant civil, criminal, and administrative cases, and penalties under the NIRC of 1997, as amended.

Immunity from other investigations or suits insofar as they relate to the assets, liabilities, net worth and internal revenue taxes that are subject of the tax amnesty.

Tax delinquency is considered settled.

Criminal case and its corresponding civil or administrative case will be terminated.

BIR or its duly authorized representative shall issue a Lifting of Notice of Levy/Garnishment issued in favor of the taxpayer.

BIR shall also issue an Authority to Cancel Assessment in favor of the taxpayer. (Sec. 20).

SEC. 24 OF RA 11213 AMENDS SEC. 270 OF NIRC OF 1997.

Sec. 24 of RA 11213 amended Sec. 270 of the NIRC by including Sec. 6(F) in the exceptions on unlawful divulgence of information and increasing the fines imposable. A comparison of the original and amended Sec. 270 is shown in the table below:

Sec. 270 Sec. 270, as amended by RA 11213
SEC. 270. Unlawful Divulgence of Trade Secrets. - Except as provided in Section 71 of this Code and Section 26 of Republic Act No. 6388, any officer or employee of the Bureau of Internal Revenue who divulges to any person or makes known in any other manner than may be provided by law information regarding the business, income or estate of any taxpayer, the secrets, operation, style or work, or apparatus of any manufacturer or producer, or confidential information regarding the business of any taxpayer, knowledge of which was acquired by him in the discharge of his official duties, shall, 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.



Any officer or employee of the Bureau of Internal Revenue who divulges or makes known in any other manner to any person other than the requesting foreign tax authority information obtained from banks and financial institutions pursuant to Section 6(F), knowledge or information acquired by him in the discharge of his official duties, shall upon conviction, 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.
SEC. 270. Unlawful Divulgence of Information. - Except as provided in Sections 6(F) and 71 of this Code and Section 26 of Republic Act No. 6388, any officer or employee of the Bureau of Internal Revenue who divulges to any person or makes known in any other manner than may be provided by law information regarding the business, income or estate of any taxpayer, the secrets, operation, style or work, or apparatus of any manufacturer or producer, or confidential information regarding the business of any taxpayer, knowledge of which was acquired by him in the discharge of his official duties, shall, 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.

Any officer or employee of the Bureau of Internal Revenue who divulges or makes known in any other manner to any person other than the requesting foreign tax authority information obtained from banks and financial institutions pursuant to Section 6(F), knowledge or information acquired by him in the discharge of his official duties, shall, upon conviction, be punished by a fine of not less than Five Hundred Thousand pesos (P500,000) but not more than One Million Pesos (P1,000,000.00), or suffer imprisonment of not less than two (2) years but not more than five (5) years, or both.

SEC. 25 OF RA 11213 PROHIBITS THE UNLAWFUL DIVULGENCE OF INFORMATION STATED IN THE TAX AMNESTY RETURN AND APPURTENANT DOCUMENTS.

It is unlawful for any person to disclose information contained in the Tax Amnesty Return and its appurtenant documents. The imposable penalty for violation of Sec. 25 of RA 11213 is imprisonment of not less than six (6) years but not more than ten (10) years, and a fine of One Hundred Fifty Thousand Pesos (P150,000.00). If the offender is an officer or employee of the BIR or any government entity, the penalties under Sec. 270 of the NIRC of 1997, as amended, shall apply.  The offender shall also suffer perpetual disqualification to hold public office.

 

IMPLEMENTING RULES AND REGULATIONS.

The Secretary of Finance shall, in coordination with the Commissioner of Internal Revenue, promulgate and publish, the necessary rules and regulations within ninety (90) days from the effectivity of the Tax Amnesty Act. Failure to promulgate the IRR shall not prevent the implementation of the Act upon its effectivity.

 

EFFECTIVITY.

The Act shall take effect fifteen (15) days after its complete publication in the Official Gazette or in at least one (1) newspaper of general circulation.  The Act was published in the Official Gazette on February 18, 2019, and hence, shall take effect on March 5, 2019.

 

Note: The information provided herein is general and may not be applicable in all situations. It should not be acted upon without specific legal advice based on particular situations. If you have any questions, please feel free to contact any of the following at telephone number (632) 633-9418, facsimile number (632) 633-1911, or at the indicated e-mail address:

 

Carlos G. Baniqued                                  cgbaniqued@baniquedlaw.com

Laura Victoria A.S. Yuson-Layug            lvyusonlayug@baniquedlaw.com

Terence Conrad H. Bello                          thbello@baniquedlaw.com

Suzette A. Celicious-Sy                            sacelicious@baniquedlaw.com

Madeline L. Zialcita-Villapando            mlzvillapando@baniquedlaw.com

Emma Malou L. Gan                               eulim@baniquedlaw.com

Ana Marie C. Lomboy                              aclomboy@baniquedlaw.com

Kathleen Mae M. Villamin                     kmvillamin@baniquedlaw.com

Agnes Bianca L. Mendoza                       almendoza@baniquedlaw.com

Casiano V. Flores                                     cvflores@baniquedlaw.com

Masami Yrvin B. Oba                              mboba@baniquedlaw.com

Mark Roland C. Domingo                       mcdomingo@baniquedlaw.com

John Marti C. Duya                                 jcduya@baniquedlaw.com

Alebeth Libra L. De la Calzada               aldelacalzada@baniquedlaw.com

Marian M. Cloma                                   mmcloma@baniquedlaw.com

Ana Margaret T. Dahilig                         atdahilig@baniquedlaw.com

 

 

Past issues of our Tax Alert are available at our website at www.baniquedlaw.com.

 

 

CONNECT with US

Address:
8/F Jollibee Centre, San Miguel Avenue 1605 Pasig City, Philippines
Telephone:
(632) 633-9418
Fax:
(632) 633-1911; (632) 687-7674
Email:
mail@baniquedlaw.com

Baniqued Layug & Bello

2019

Website powered by: Pinoys Interactive