BIR clarifies tax amnesty rules

The Bureau of Internal Revenue (BIR) has issued Revenue Memorandum Circular (RMC) No. 69-2007, clarifying issues in the implementation of the Tax Amnesty Program, under Republic Act No. 9480, which runs from last Sept. 6 to March 6 next year, an official statement Thursday read. Internal Revenue Commissioner Lilian B. Hefti signed the circular, which seeks to answer common questions raised during the Tax Amnesty road shows held nationwide that were presided over by Ms. Hefti and House of Representatives Oversight Committee Chairman Rep. Danilo E. Suarez of the third district of Quezon province. First, the BIR clarified that cases that are subjects of criminal complaints filed with the Department of Justice are still covered by tax amnesty, except those cases filed under the Run After Tax Evaders, or RATE, program and other tax evasion cases initiated with the approval of the Commissioner of Internal Revenue. Second, amnesty availment will not affect assessment against the taxpayer, in case such assessment had become final and executory prior to the amnesty availment. Such assessments are already considered accounts receivable of the BIR or assets of the government, the statement stressed. Third, in availing of tax amnesty, taxpayers are assured that their books of accounts and other records for the years covered by the tax amnesty availed of cannot be examined by the tax bureau, on the presumption that the Statement of Assets, Liabilities and Net worth (SALN) and the Tax Amnesty Return (TAR) filed and submitted simultaneously to the BIR, as required by the program, are true and correct. Fourth, tax amnesty benefits and privileges do not apply: * to persons who failed to file their SALNs and TARs; or * where the amount of declared net worth as of Dec. 31, 2005, or at of end of fiscal year of any month in year 2005 — whichever is applicable — is proven to be understated by at least 30% during proceedings within one year following the date of filing the TAR and the SALN, or when the findings of or admission in congressional hearings on proceedings in state administrative agencies and in courts prove that there is at least 30% under-declaration of net worth. Fifth, taxpayers who have filed with the BIR’s authorized agents their SALNs or balance sheet must also submit their income tax returns for taxable year 2005. Sixth, taxpayers availing of tax amnesty will have to amend their previously filed statements by including still undeclared assets and/or liabilities, as well as pay an amnesty tax equal to 5% of the resulting increase in their net worth or the minimum amount prescribed by the Tax Amnesty Law for each category of taxpayer, whichever is higher. Seventh, the issuance defined the frameworks for SALNs and balance sheet reporting. * All assets, liabilities and net worth shall be valued and reflected in the SALN/balance sheet following prevailing Philippine Financial Reporting Standards, unless a different rule is mandated or allowed by the concerned regulatory agency. * For individuals’ business assets and/or liabilities and net worth, valuation should follow the generally accepted accounting principles (GAAP). * For non business-related assets and/or liabilities and net worth, valuation should be at cost if acquired through purchaser; or at fair market value (FMV) if acquired through inheritance or donation. Valuation should be computed at FMV/Zonal Value at the time of death or the date of donation, whichever is applicable. * For cooperatives, foundations and partnerships, the valuation of assets and liabilities and net worth shall follow the mandated rules of the concerned regulatory agencies, namely: the Securities and Exchange Commission and the Cooperatives Development Authority. * For estates under administration and those held under trust, the valuation of assets and liabilities and net worth shall follow GAAP. - BusinessWorld