BIR to assess banks with existing DST liabilities

The Bureau of Internal Revenue (BIR) will proceed with its assessment of banks with existing documentary stamp tax (DST) liabilities even as several of these banks have already applied for tax amnesty, the BIR’s top official said.

In a dialogue with comptrollers and accountants of large banks and financial institutions Friday, BIR Commissioner Lilian Hefti said that the Final Assessment Notice (FAN) issued but protested can be covered by the tax amnesty law.

However, she stressed that cases that were already ruled by the Supreme Court in favor of the tax agency are not covered by the tax amnesty law.

“Again to clarify these concerns, cases previously decided by the court with finality are no longer covered by the tax amnesty law considering that the issues have already been ruled by the SC with finality and has been applied to other cases under similar circumstances,” Hefti said.

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 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.

Several banks have already applied for tax amnesty for these DST liabilities. 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 least P3.83 billion from the program.

Under the law, the tax amnesty rate is five 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.