BIR to pursue cases against banks remiss in their DST obligations

The Bureau of Internal Revenue (BIR) will pursue the cases it has filed against banks which have been delinquent in their documentary stamp tax (DST) obligations even if these banks file for tax amnesty, the agency’s top official said yesterday.

BIR commissioner Lilian Hefti said the agency will let the courts decide on whether banks with pending DST payments are eligible for tax amnesty.

This means that the BIR will object if banks ask the courts to drop the cases against them now that the Tax Amnesty Law of 2007 is in effect, Hefti said.

The BIR chief reasoned out that the agency has already won in some of the cases against banks involving DST liabilities. Hefti believes that the agency may also earn favorable court decisions with the other pending DST cases against banks.

Several banks have already applied for tax amnesty for these DST liabilities but Hefti said the BIR would leave it with the courts to decide whether the banks are eligible for amnesty or not.

The BIR has been running after banks’ accumulated DST liabilities, which are estimated to reach billions of pesos. The issue stemmed from the creation of special savings deposit accounts that the banks offered to clients who wanted higher yields on their deposits.

Under the National Internal Revenue Code, special savings accounts, including time deposits, are subject to documentary stamp tax while ordinary savings accounts are not.

The BIR said that most banks in the country created special saving deposit accounts to give their clients higher returns and the comfort of being able to withdraw their money as needed but not a single bank has remitted DST on special savings deposit accounts.

The government’s tax amnesty program through the Tax Amnesty Law of 2007, started last Sept. 6.

The law immunes a qualified taxpayer from any law suits involving deficient tax payments covering the period 2005 and prior years if he or she pays the tax amnesty fee, which finance officials described as encouraging enough.

The BIR is eyeing to raise at P3.83 billion from the program.

Under the law, the tax amnesty rate is 5 percent of a taxpayer’s net worth or a fee ranging from P25,000 to P500,000 depending on the individual or company’s net worth.