by: Jay-ar B. Lawas
People are used to saying that an opportunity knocks only once. Most of the time, they say it with so much conviction as if they are certain that an opportunity will never come back once forsaken. But if an opportunity indeed knocks only once, how long does the knocking last – too swift for us to miss it or just enough for us to grab it? Honestly, I do not know. But one thing is beyond doubt: opportunities are always just in front of us openly waiting to be seized.
In taxation, opportunities likewise abound. Currently, the Comprehensive Tax Reform Program (CTRP) of the government is the talk of the town. It seeks to create a simple, fairer and more efficient tax system which is anticipated to provide opportunities not only for taxpayers but also for potential investors.
Relative to CTRP, on 14 February 2019, Republic Act No. 11213, otherwise known as the Tax Amnesty Act, was approved and signed into law by President Rodrigo Duterte granting an amnesty on all unpaid internal revenue taxes imposed by the national government for taxable year 2017 and prior years with respect to estate tax, other internal revenue taxes and tax on delinquencies, with the main objective of granting taxpayers an opportunity to settle their outstanding liabilities with a view of providing the government additional revenues to support its infrastructure and social projects.
The Tax Amnesty Act provides, among others, a Tax Amnesty on Delinquencies covering all national internal revenue taxes such as, but not limited to, income tax, withholding tax, capital gains tax, donor’s tax, value-added tax, other percentage taxes, excise tax and documentary stamp tax collected by the BIR, including value-added tax and excise taxes collected by the Bureau of Customs (BOC) for taxable year 2017 and prior years.
Under Section 17 and 18 of the Tax Amnesty Act, the Tax Amnesty on Delinquencies may be availed for: (1) delinquencies and assessments which have become final and executory and availing taxpayers shall pay for the 40% of the basic tax assessed; (2) tax cases subject of final and executory judgment by the courts and availing taxpayers shall pay for the 50% of the basic tax assessed; (3) pending criminal cases with criminal information filed with the Department of Justice or the courts for tax evasion and other criminal offenses under Chapter II of Title X and Section 275 of the Tax Code, with or without assessments duly issued and availing taxpayers shall pay for the 60% of the basic tax assessed; and (4) for withholding tax agents who withheld taxes but failed to remit the same to the BIR and availing taxpayers shall pay for the 100% of the basic tax assessed.
Consequently, in accordance to Section 20 of the Tax Amnesty Act, the tax delinquency of taxpayer who will avail of the Tax Amnesty on Delinquencies shall be considered settled and the criminal case under Section 18(c) and its corresponding civil or administrative cases, if applicable, be terminated. Furthermore, availing taxpayer shall be immune from all suits or actions, including the payment of said delinquency or assessment, as well as additions thereto, and from all appurtenant civil, criminal, and administrative cases and penalties under the Tax Code, and any notice of levy, attachments and/or warrants of garnishment issued against the taxpayer shall be cancelled.
Seemingly, by taking into consideration these immunities and privileges annexed to the availment of the Tax Amnesty on Delinquencies, we could say that this is a good opportunity that every errant taxpayer should view not only as a means of settling their outstanding liabilities with the BIR, but also obtaining a substantial amount of tax savings. However, there is one crucial thing that taxpayers should take into account – the availment period.
Section 19 of the Tax Amnesty Act provides that any person, natural or juridical, who wishes to avail of the Tax Amnesty on Delinquencies shall, within one (1) year from the effectivity of its Implementing Rules and Regulations (IRR), file with the appropriate office of the BIR, which has jurisdiction over the residence or principal place of business of the taxpayer, a sworn Tax Amnesty on Delinquency Return accompanied by a Certification of Delinquency. Relative to this, on 05 April 2019, the BIR has issued Revenue Regulations (RR) No. 04-2019 to serve as the IRR of the Tax Amnesty Act that took effect on 24 April 2019, that was fifteen (15) days from the date of its publication in the newspaper of general circulation (Malaya Business Insights).
Apparently, at present, taxpayers are left with a short period of time to take advantage of the Tax Amnesty on Delinquencies – to grab an opportunity which is rarely given. However, it seems that the world demands for a once-in-a-tax-life opportunity to knock even longer but only if the circumstances, such as those beyond our control, warrant it.
On 16 March 2020, in consideration of the current circumstances prevailing in the country in relation to World Health Organization’s declaration of Covid-19 Global Pandemic, which led to the implementation of the Enhanced Community Quarantine (ECQ) in the entirety of Luzon from 16 March 2020 to 12 April 2020, the BIR has issued RR No. 05-2020, amending RR No. 04-2019, particularly the cut-off date for the availment of the Tax Amnesty on Delinquencies.
Pursuant to Section 2 of RR No. 05-2020, all persons, whether natural or juridical, with internal revenue tax liabilities covering taxable year 2017 and prior years, may avail of Tax Amnesty on Delinquencies within one year from the effectivity of these Regulations or until 23 April 2020. However, the said date may be extended if the circumstances warrant an extension such as in case of country-wide economic or health reason/s.
In this regard, on 24 March 2020, the BIR has issued Revenue Memorandum Circular (RMC) No. 33-2020 to extend the deadline to avail the Tax Amnesty on Delinquencies from 23 April 2020 to 23 May 2020.
Recently, however, on 07 April 2020, the BIR has issued RMC No. 38-2020 to further extend the deadline to avail the Tax Amnesty on Delinquencies from 23 May 2020 to 08 June 2020 in consideration of the extension of the ECQ over the entire Luzon until 30 April 2020.
Relative to the above issuances, the extension of the cut-off date for the availment of the Tax Amnesty on Delinquencies could be considered as a reminder for all taxpayers who are qualified and wish to avail the same, or even for those who gave up their chances, to take advantage of this kind of opportunity. In fact, this could be one of the first steps that taxpayers have to take to start anew with a clean slate that could also help the government to raise revenue in order to support its vision for national development.
They say that nothing is more costly than a missed opportunity. In taxation, this can’t be more true in the case of this amnesty program. Taxpayers must carefully consider the option of availing of Tax Amnesty, especially if their goal is to have a fresh start. Tax Amnesty may also be viewed as a means of addressing the clamor of taxpayers for help to overcome the destructive effect of unpaid taxes. But now that such an opportunity is knocking, what are you going to do – take it or leave it?
Jay-ar B. Lawas is an Associate from the Tax Group of KPMG R.G. Manabat & Co. (KPMG RGM&Co.), the Philippine member firm of KPMG International. KPMG RGM&Co. has been recognized as a Tier 1 tax practice and Tier 1 transfer pricing practice by the International Tax Review.
This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity.
The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG International or KPMG RGM&Co. For comments or inquiries, please email firstname.lastname@example.org or email@example.com.
© 2021 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance.