DOF sets rules on tax amnesty

The Department of Finance (DOF) is expected to release today the implementing rules and regulations of the Tax Amnesty Law of 2006.  

The law immunes a qualified taxpayer from any lawsuits involving tax payments if he pays a certain amnesty fee. 

According to the IRR, tax evasion cases that have been given final and executory judgement by the courts are excluded from the coverage of the tax amnesty law, Finance Undersecretary Gaudencio Mendoza Jr. told reporters yesterday.  

“Tax evasion cases that are pending in court are qualified unless there is already final and executory judgement,” he said.   

BIR officials did not want to include pending cases in court to focus on new cases but these were nonetheless included in the coverage of the law.

Under the law, the schedule of the tax amnesty rate is as follows:   

Individuals, cooperatives, foundations, and other juridical entities are imposed an amnesty fee of five percent of networth or P50,000, whichever is higher.  

Corporations with subscribed capital of more than P50 million are imposed an amnesty fee of five percent of networth or 500,000, whichever is higher; while those with subscribed capital of above P20 million to P50 million are covered by an amnesty fee of five percent of networth or P250,000, whichever is higher.  

Corporations with subscribed capital of between P5 million and P20 million will only have to pay a fee of five percent of networth or P100,000, whichever is higher, to avail itself of the amnesty; while those with subscribed capital of below P5 million shall be imposed an amnesty fee of five percent of networth or P25,000, whichever is higher. 

The tax amnesty bill was one of the reform agenda pushed by the Arroyo administration in 2004 to help fix the government’s fiscal situation.  

At present, the government is running after a total of P71 billion worth of unpaid taxes through the various tax evasion cases pending in court.   

The DOF expects some 150,000 to 200,000 taxpayers to apply for amnesty under the new law.  

The BIR incurred a revenue shortfall of P38.6 billion in the first half of the year as revenues reached only P334.7 billion against the target of P373.3 billion.

For the whole year, the BIR has a revenue target of P730 billion.