Primer on the Tax Amnesty Act of 2007 (RA 9480)

What is Republic Act No. 9480?

It is a law, referred to as the “Tax Amnesty Act of 2007” passed by Congress granting amnesty to all unpaid internal revenue taxes imposed by the national government for the taxable year 2005 and prior years.

Until when can taxpayers avail of the benefits of this law?

The last day to avail of tax amnesty is 5 May 2008, as clarified in Department of Finance (DOF) Department Order No. 11-08.

What is its coverage?

The tax amnesty covers all national internal revenue taxes for the taxable year 2005 and prior years that have remained unpaid as of 31 December 2005.

Who may avail of the tax amnesty and how much is the amnesty tax?

Any person may avail himself of the benefits of tax amnesty and pay the amnesty tax based on his networth as of 31 December 2005 as declared in the Statement of Assets, Liabilities and Networth (SALN), in accordance with the following schedule:

1. Individuals (whether resident or nonresident citizens, including resident or nonresident aliens), Trusts and Estates — 5% or P50,000, whichever is higher

2. Corporations with subscribed capital of above P50 Million — 5% or P500,000 whichever is higher

3. Corporations With subscribed capital of above P20 Million up to P50 Million — 5% or P250,000, whichever is higher

4. Corporations With subscribed capital of P5 Million to P20 Million — 5% or P100,000, whichever is higher

5. Corporations With subscribed capital of below P5 Million — 5% or P25,000, whichever is higher

6. Other juridical entities, including, but not limited to, cooperatives and foundations, that have become taxable as of 31 December 2005 whichever is higher — 5% or P50,000,

Who are not allowed to avail of the tax amnesty?

The amnesty does not cover the following persons or cases existing as of the effectivity of the law:

1. Withholding agents with respects to their withholding tax liabilities.

2. Those with pending cases falling under the jurisdiction of the Presidential Commission on Good Government.

3. Those with pending cases involving unexplained or unlawfully acquired wealth or under the Anti-Graft and Corrupt Practices Act.

4. Those with pending cases filed in court involving violation of the Anti-Money Laundering Law.

5. Those with pending criminal cases for tax evasion and other criminal offenses under Chapter II of Title X of the National Internal Revenue Code of 1997 (NIRC), as amended, and the felonies of frauds, illegal exactions and transactions, and malversation of public funds and property under Chapters III and IV of Title VII of the Revised Penal Code.

6. Tax cases subject of final and executory judgment by the courts.

How to avail of the tax amnesty?

The taxpayer shall file with the Bureau of Internal Revenue (BIR) a notice and Tax Amnesty Return accompanied by the SALN as of 31 December 2005, in such form as may be prescribed in the implementing rules and regulations (IRR), and pay the applicable amnesty tax within six months from the effectivity of the IRR.

What information are required to be declared in the SALN?

The SALN shall contain a declaration of the assets, liabilities and networth as of 31 December 2005, as follows:

1. Assets within or without the Philippines, whether real or personal, tangible or intangible, whether or not used in trade or business.

2. All existing liabilities which are legitimate and enforceable, secured or unsecured, whether or not incurred in trade or business.

3. The networth of the taxpayer, which shall be the difference between the total assets and total liabilities.

What are the immunities and privileges under this law?

1. The taxpayer shall be immune from the payment of taxes, as well as addition thereto, and the corresponding civil, criminal or administrative penalties under the NIRC arising from the failure to pay any and all internal revenue taxes for taxable year 2005 and prior years.

2. The taxpayer’s Tax Amnesty Returns and the SALN as of 31 December 2005 shall be inadmissible as evidence in all proceedings that pertain to taxable year 2005 and prior years, insofar as such proceedings relate to internal revenue taxes, before judicial, quasi-judicial or administrative bodies in which he is a defendant or respondent, and it shall not be examined, inquired or looked into by any person or government office, except: (a) for the purpose of ascertaining the networth beginning 1 January 2006; and (b) when the taxpayer uses it as a defense, whenever appropriate, in cases brought against him.

3. The books of accounts and other records of the taxpayer for the years covered by the tax amnesty availed of shall not be examined, except when the Commissioner of Internal Revenue authorize in writing the examination of the said books of accounts and other records to verify the validity or correctness of a claim for any tax refund, tax credit (other than refund or credit of taxes withheld on wages), tax incentives, and/or exemptions under existing laws.

4. Presumption that the SALN as of December 31, 2005 is true and correct, except: (a) where the amount of declared networth is understated to the extent of 30% or more, but the proceedings for such determination must be initiated within 1 year following the date of the filing of the tax amnesty return and the SALN; and (b) when findings of or admission in congressional hearings, other administrative agencies of government, and/or courts prove the 30% under-declaration.

What instances are these immunities not applicable?

1. Where the person failed to file a SALN and the Tax Amnesty Return.

2. Where the amount of networth as of 31 December 2005 is proven to be understated to the extent of thirty percent (30%) or more.

What happens upon finding of under-declaration of net worth?

1. Any person who willfully understates his networth to the extent of 30% or more shall be subject to the penalties of perjury under the Revised Penal Code.

2. The willful failure to declare any property in the statement and/or in the Tax Amnesty Return shall be deemed in prima facie evidence of fraud and shall constitute a ground upon which attachment of such property may be issued in favor of the BIR to answer for the satisfaction of any judgment that may be acquired against the declarant.

3. In addition, immediate tax fraud investigation shall be conducted to collect all taxes due, including increments, and to criminally prosecute those found to have willfully evaded lawful taxes due.

In the case of associations, partnerships, or corporations, who shall be liable for the penalties?

The corresponding penalty shall be imposed on the partner, president, general manager, branch manager, treasurer, officer-in-charge and employees responsible for the violation.

If I don’t avail of this tax amnesty, will there be similar laws in the future?

The expressed intent of the law is to put a moratorium on the grant of tax amnesty, including administrative tax amnesty by the BIR. This is to encourage and improve tax compliance by taxpayers.

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