Solon seeks granting of estate tax amnesty to raise gov’t revenue collection

A House member is seeking the grant of estate tax amnesty to maximize

the government’s tax collection and free-up property of unsettled
estates so that they may be opened to business transactions and
stimulate economic activities.

Rep. Arthur Defensor, Jr. (3rd District, Iloilo) said freeing up
properties after tax settlement will allow them to be sold, leased,
subject of joint venture agreements, or whatever transaction that will
have tax consequences and result in increased tax collection for the
government.

Defensor, an assistant majority leader, said his proposal, House Bill
5703 or the proposed Estate Tax Amnesty Law,” will complement the
administrative measures of the Bureau of Internal Revenue which in the
long term enhance tax collection.

“While an estate tax amnesty, at first glance, appears to be a
negative revenue generation measure, it is posited that, in the long
term, it would increase tax collection,” he said.

Records of the BIR show that estate tax is a poor performer in the
area of collection according to Defensor.

In fact, he said the BIR has launched “Project Rest in Peace” through
the issuance of Revenue Memorandum Order 10-2010 which targets the
increase in estate tax collection and number of estate tax returns
filed.

“RMO 10-2010 is an administrative measure that will closely monitor
potential estate tax cases by establishing linkages with, and
accessing the records of, the Civil Registers, hospitals, memorial
parks, cemeteries, funeral parks, crematoriums, judicial clerks of
courts, life insurance companies and other relevant financial
institutions,” said Defensor.

Defensor said HB 5703 will complement the BIR administrative measures
to enhance collection. “The essence of the grant of estate tax amnesty
under this bill is a radical deviation from the existing rates under
Republic Act 8424, as amended. While a radical decrease in estate tax
rates would decrease estate tax collection, it is intended to make
estate settlement and estate tax payment attractive.”

House Bill 5703 shall cover all unpaid estate taxes as of the time the
measure becomes a law and those that shall be paid within five years
henceforth. The estate tax amnesty shall only be available within five
years from the effectivity of the law.

The estate tax covered by the amnesty shall be levied, assessed,
collected and paid upon the transfer of the net estate, as determined
in accordance with Sections 85 and 86 of RA 8424 or the National
Internal Revenue Code, as amended, of every decedent, whether resident
or non-resident of the Philippines, based on the value of such net
estate.

If the net estate value is worth over P2 million to P5 million, the
tax exemption shall be P15,000.00 plus five percent of the excess over
P2 million. If the net estate value is over P5 million to P10 million,
the tax exemption shall be P135,000.00 plus eight percent of the
excess over P5 million. If the net estate value is P10 million to P50
million, the tax exemption shall be P465,000.00 plus 11 percent of the
excess over P10 million.

For those with net estate value exceeding P50 million, they shall be
levied and assessed to pay estate tax based on the schedule in Section
84 of RA 8424, as amended.

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