Department of Finance supports amnesty for delinquent taxpayers

MANILA, Philippines — 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.

“In principle, we support it not because we need the money at this point, but because we want a complete database of taxpayers and their net worth level so that in the future, it will be easier for us to collect more taxes in a more efficient manner,” Joven said.

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.

“We are studying whether or not to include them because there are a lot of pending cases which will take a long time to resolve so we want to bite the safety by making sure the government is not on a disadvantage by settling these cases,” Joven said.

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, eight percent is slightly on the high side. In addition, based on historical amnesties, the last amnesty we had was a five percent 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 eight percent.

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 P38.9 billion, thus resulting in incremental revenue of P128.8 billion when combined with Package 1A.