House committee passes bill on estate tax amnesty

The House of Representatives' Committee on Ways and Means has recently approved a measure seeking to grant amnesty in the payment of estate taxes.

In a statement on Saturday, the House committee said it has passed a substitute bill which seeks to impose amnesty to unpaid estate taxes.

Quirino Rep. Dakila Carlo Cua, committee chairman, led the passage of the unnumbered bill which substituted House Bill 1889 authored by Iloilo third district Rep. Arthur Defensor Jr. and HB 3010 by Deputy Speaker and Marikina City 2nd District Rep. Romero “Miro” Quimbo.

Both bills were titled “An Act Granting Amnesty in Estate Tax.”

Estate tax refers to the tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs and beneficiaries at the time of death and on certain transfers, which are made by law as equivalent to testamentary disposition.

The substitute bill seeks to increase tax collection levels by granting amnesty in the payment of unsettled estate taxes and to promote the settlement of estates.

The amnesty would free-up properties of unsettled estates, with the end goal of generating financial transactions and stimulating economic activity.

The bill also provides that the tax amnesty shall cover estate taxes for taxable year 2016 and for prior years that have remained unpaid as of December 31, 2016.

The measure grants the following immunities and privileges to taxpayers who avail of the tax amnesty:

• Immunity from the payment of estate taxes, civil, criminal, or administrative penalties.
• The taxpayer’s Estate Tax Amnesty Returns for 2016 and prior years shall not be admissible as evidence in all judicial, quasi-judicial, or administrative proceedings.
• The books of accounts and other records of the taxpayer for the years covered by the estate tax amnesty availed of shall not be examined.

Defensor explained that the tax amnesty is being sought because the collection of the Bureau of Internal Revenue (BIR) on estate tax is insignificant compared to the overall tax collection.

“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,” Defensor said.

For his part, Quimbo took note that 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 percent of the cases, the penalties are even higher than the value of the properties,” Quimbo said.

The House committee has also approved a substitute bill proposing a single tax rate of six percent on estates based on the value of the net estate.

This would be done by amending Section 84 of the National Internal Revenue Code (NIRC) of 1997, as amended.

Cua said the objective of the bill is to reduce the existing estate tax rate and ensure fair taxation.

The bill substituted House Bills 458, 3311, 3528, 3794 and 4394 filed respectively by Representatives Jesulito Manalo of ANGKLA party-lis, Juliette Uy of the second district of Misamis Oriental, Angelina Tan of the fourth district of Quezon, Rosenda Ann Ocampo of the sixth district of Manila, and Evelina Escudero of the first district of Sorsogon. —John Ted Cordero/ALG, GMA News