In last week’s article, we discussed House Bill (HB) 8554, the proposed “Tax Amnesty Act of 2018,” covering tax liabilities for taxable year 2017 and prior years, with or without tax assessments, that have remained unpaid as of Dec. 31, 2017. HB 8554 was approved by the House of Representatives on third and final reading on Nov. 20, 2018, and is sponsored by House Ways and Means Committee Chairman Estrellita B. Suansing of the second district of Nueva Ecija.
On Nov. 19, 2018, the Senate also approved their own version of the “Tax Amnesty Act of 2018”. Senate Bill (SB) 2059, sponsored by Sen. Juan Edgardo “Sonny
“Angara, aims to provide a one-time opportunity for taxpayers to settle tax obligations incurred on or before Dec. 31, 2017 through a tax amnesty program which seeks
to simplify tax compliance requirements.
With two versions of the “Tax Amnesty Act of 2018” it would be worthwhile to look into how different and alike HB 8554 and SB 2059 are from each other.
To start off, both bills comprise three separate tax amnesty programs: an estate tax amnesty, a general tax amnesty and a tax amnesty on delinquencies. Taxpayers who avail of the tax amnesty shall be immune from the payment of taxes as well as any additional civil, criminal and administrative penalties under the National Internal Revenue Code (NIRC).
The estate tax amnesty provisions under both bills provide for an amnesty tax of 6 percent based on the decedent’s total net estate at the time of death, which can be availed of by estates of decedents who died in 2017 and prior years.
It is with the general tax amnesty provisions that both bills differ from each other. The House’s version is much simpler, as it provides for an amnesty tax of 2 percent based on the taxpayer’s total assets as of December 31, 2017, as declared in a “Statement of Total Assets”. The Senate’s version on the other hand is a bit more complicated.
For individuals, trusts and estates, the amnesty tax is 5 percent or P100,000, whichever is higher.
For corporations, the amnesty tax is a flat rate of 5 percent as well as graduated amounts of minimum amnesty tax payments, depending on the amount of the corporation’s subscribed capital. For example, corporations with a subscribed capital of more than P50M will have to pay an amnesty tax of 5 percent based on its total assets or P1 million, whichever is higher.
In addition, the Senate version provides for lowered tax amnesty rates if the application for a tax amnesty is filed, and the amnesty tax is paid within a certain period of time from the issuance by the Department of Finance (DoF) of the implementing rules and regulations (IRR). Note that under the House and Senate versions, the filing of the tax amnesty application shall be made within one year from the effectivity of the IRR. Under the Senate version, if the tax amnesty application is filed, and the amnesty tax paid on or before the end of the third calendar month from the effectivity of the IRR, the amnesty rate is lowered to 4 percent.
As for the tax amnesty on delinquencies, under the House version, withholding agents are given the opportunity to settle their withholding tax obligations by paying 100 percent of the basic withholding tax deficiencies. This privilege is not available under the Senate version.
With these differences between the Senate and House versions, the next step would be for both Houses to thresh these out under a conference committee to resolve all differences.