here’s the latest on Estate Tax ruling from bworld.com’s correspondent, Raynan F. Javil for your reference. Again this is positive news as quite a number of properties inherited by “Heirs” all over the Philippines have had this issue either because the percentage of Estate Tax is too high or they simply don’t have the funds to pay for the taxes. This will eventually spur the sale of more properties which from my experience, most Heirs just want to sell for their individual priorities ! In addition, this will provide the Bureau of Internal Revenue and the Government much needed income to fund infrastructure developments considering the Philippines is definitely one of the leading “emerging markets” in the world !
House committee OK’s estate tax amnesty
THOSE who have been remiss in paying the estate tax on the property of a deceased loved one may soon get a chance to wipe their slate clean, after the House of Representatives Ways and Means committee got the ball rolling on a one-time amnesty for this delinquency.
The House ways and means committee, chaired by Quirino Rep. Dakila Carlo E. Cua, approved last week the still-unnumbered bill, which substituted House Bill (HB) No. 1889 authored by Iloilo Rep. Arthur R. Defensor Jr. (third district) and HB 3010 introduced by Deputy Speaker Romero Federico S. Quimbo (Marikina City, second district), both titled “An Act Granting Amnesty in Estate Tax.”
Mr. Cua said in a text message yesterday that “the amnesty rate is 6% and penalties waived,” meaning that those who will avail the tax amnesty will need to pay a single tax rate of 6% on the value of the net estate.
The National Internal Revenue Code of 1997 currently exempts from tax a net estate of up to P200,000, and levies 5%, 8%, 11%, 15% and 20% depending on which bracket the property belongs.
Collection of appropriate estate taxes has been elusive for the Bureau of Internal Revenue, with the past administration estimating that annual take could actually go up to P10-50 billion from less than P1 billion currently.
Besides contributing to an overall increase in much-needed revenues, the amnesty is designed to free up properties — encumbered by such liability — for productive use.
The bill grants the following immunities and privileges to taxpayers who avail of the planned amnesty: immunity from civil, criminal or administrative penalties; estate tax amnesty returns for 2016 and prior years will not be admissible as evidence in judicial, quasi-judicial, or administrative proceedings; and the books of accounts and other records of the taxpayers for the years covered by the amnesty will not be examined.
Mr. Defensor said the Bureau of Internal Revenue itself backs the plan since estate tax take has been “insignificant compared to the overall tax collection.”
He added there are many properties tied up to billions of pesos worth of unsettled estate tax that have become “idle capital.”
“If these properties are sent back to commercial circulation and are made subject to transaction such as sale, lease, or joint venture, in the long run, they can generate more taxes,” said Mr. Defensor.
Mr. Quimbo said that, under the measure, “properties that are caught in a bind, not being utilized and are not being part of the economy, because estate taxes have remained unpaid, are brought back to commercial circulation.”
“The primary cause of the inability to settle estate tax is due to high estate tax rates and, secondly, the inability to cope with the penalties that have accrued. In 95% of the cases, the penalties are even higher than the value of the properties,” noted Mr. Quimbo.
Asked if the House leadership would support the measure, Speaker Pantaleon D. Alvarez replied “Yes” in a text message.
A similar proposal was filed in the 16th Congress, but failed to pass even the committee level.
At least eight similar measures are pending before the Senate ways and means committee.
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Robert G. Sarmiento Properties
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