Executive summary

The Philippine President approved, on 14 February 2019, the proposed law granting tax amnesty (Tax Amnesty Law) on estate taxes and tax delinquencies covering all taxes under the Internal Revenue Code and value-added tax (VAT) collected by the Bureau of Customs. The immunities and privileges can be enjoyed upon the payment of the tax amnesty within the specified time period.

This Alert summarizes the key provisions of the law granting tax amnesty on delinquencies.

Detailed discussion

Coverage

The delinquency tax amnesty covers all national taxes including income tax, withholding tax, capital gains tax, donor’s tax, VAT, percentage tax, excise tax, and documentary stamp tax, for the taxable year ended 2017 and prior years.

The delinquency tax amnesty is available for the following cases:

1. Delinquencies and assessments that have become final. These include delinquent tax accounts where applications for compromise¹ are denied by the evaluation boards before the Implementing Rules and Regulations (IRR) to this Tax Amnesty Law become effective
2. Pending criminal cases for tax evasion and other criminal offenses under the Philippine Tax Code, with or without duly-issued assessments
3. Tax cases subject to final judgments by the courts on or before the IRR become effective
4. Withholding tax agents who failed to remit the withholding tax to the Bureau of Internal Revenue (BIR)

Entitlement of tax amnesty on delinquencies

The tax amnesty privileges and immunities are applicable upon the payment of tax amnesty with rates depending on the delinquent case:

Period for payment of amnesty tax

Any taxpayer who wishes to be eligible for the delinquency tax amnesty should file a sworn Tax Amnesty on Delinquency Return accompanied by a Certification of Delinquency within one year from the effectiveness of the IRR to the Tax Amnesty Law with the appropriate BIR revenue district office. The amnesty tax should be paid at the time the tax return is filed.

Immunities and privileges

Those who apply for the delinquency tax amnesty and have fully complied with all the conditions can enjoy the following immunities and privileges upon payment of the amnesty tax:

• The tax delinquency should be considered settled and the criminal case with its corresponding civil or administrative case, if applicable, will be closed.
• The taxpayer will be immune from all lawsuits and actions, including the payment of the delinquency or assessment and from all corresponding criminal, civil, or administrative cases and other investigations as these relate to the taxpayer’s assets, liabilities, net worth, and internal revenue taxes that are the subject of the tax amnesty.
• Any notices of levy, attachment, warrants of garnishment issued to the taxpayer will be suspended.
• The BIR will issue the Authority to Cancel Assessment within 15 calendar days from the submission of the Acceptance Payment Form and the Tax Amnesty on Delinquencies Return.

The delinquency tax amnesty will become final upon full compliance with all the conditions and payment of the amnesty tax.

Endnote

1. Taxpayer with final and executory tax cases can apply for compromise on the basis of the following: (1) doubtful validity of the assessment; or (2) financial incapacity of the taxpayer.

For additional information with respect to this Alert, please contact the following:

Ernst & Young Philippines (SGV & Co.), Makati City

• Luis Jose P. Ferrer | luis.jose.p.ferrer@ph.ey.com
• Fidela T. Isip-Reyes | fidela.t.isip-reyes@ph.ey.com

Ernst & Young LLP, Philippine Tax Desk, New York

• Betheena Dizon | betheena.c.dizon1@ey.com

Ernst & Young LLP, Asia Pacific Business Group, New York

• Chris Finnerty | chris.finnerty1@ey.com
• Kaz Parsch | kazuyo.parsch@ey.com
• Bee-Khun Yap | bee-khun.yap@ey.com

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