After several months of waiting, the Bureau of Internal Revenue (BIR) has finally issued Revenue Memorandum Circular (RMC) No. 69-2007 as a follow-up to the Implementing Rules and Regulations (IRR) of the Tax Amnesty Law (Department of Finance Order No. 29-07), earlier released on Sept. 6.
The RMC, which came out in a question-and-answer format, was intended to clarify certain important issues relative to the implementation of the Tax Amnesty Law which were not clearly addressed in the IRR.
Based on the provisions of the Tax Amnesty Law and its IRR, availment of the tax amnesty appears to be simple as the same is subject to very liberal terms and conditions. Such liberal interpretation was, in fact, confirmed by BIR representatives in the various tax and business fora where they were invited as guest speakers, making the amnesty an inviting proposition to explore.
Thus, many have wondered whether the amnesty, as envisioned in the law — which by the way is the first legislative amnesty, is really too good to be true.
RMC 69-2007 was thereafter issued by the BIR to further clarify the mechanics and conditions of availment of the amnesty.
Surprisingly, the RMC seemed to have made a turn around and provided stricter terms and conditions in the availment of the amnesty to the disappointment of many.
Among the controversial provisions are those which disqualified or limited the availment of the amnesty to certain transactions and taxpayers, notwithstanding that they are not excluded under the Law and the IRR. Specifically, the following cases have been excluded:
- one-time transactions, or ONETT, which are subject to donor’s tax and capital gains tax are not covered by the amnesty, except in cases involving underdeclaration or undervaluations and the corresponding Certificate Authorising Registration has been issued by the BIR.
- delinquent accounts including self-assessed taxes and assessments which have become final and executory in the BIR records and which are already considered accounts receivable of the BIR/assets of the government cannot avail of the amnesty.
- only companies with positive networth can avail of the tax amnesty.
- taxpayers who have entered into agreements with the BIR to pay deficiency taxes, or those covered by compromise agreement and/or abatement cannot avail of the tax amnesty program.
- protested final assessment notices which have already been ruled by the court in favor of the BIR/Government prior to the amnesty availment are disqualified from the program.
Other controversial provisions in the RMC also include the following:
- Different valuation rules in determining the value of the assets are required for each type of taxpayer for purposes of availment of the amnesty although the law clearly provides that assets should be valued at the cost at which the property was acquired.
- In cases where the taxpayers have been filing their correct networth and have no additional asset to further declare, they can avail of the amnesty by paying 5% of the total declared networth or the prescribed minimum, whichever is higher;
- For taxpayers who availed of the amnesty but have pending claims for refund/tax credit before the BIR, Bureau of Customs, Department of Finance or the courts, tax assessments can still be issued on the audit coverage.
The RMC, though, contain some provisions that are favourable to the taxpayers, e.g., provision clarifying that tax cases filed with the Department of Justice can still be covered by the amnesty and provision allowing the use of US dollars or other functional currency in the SALN preparation.
However, such provisions would not seem to create a positive response from the taxpayers because the negative impact of the controversial provisions defeat the very purpose and intention of the amnesty program. The very strict terms and conditions and limitations imposed under the RMC, not to mention the complex administrative procedure required in the filing of the amnesty, discourages instead of encourages availment of the program.
Whether inclusion of the controversial provisions in the RMC was intentional or not, is not clear.
One thing sure, though, is that the amnesty is not a welcome program to the BIR given its mandate to increase revenue collection.
Having said that, it is not far fetched to speculate the possibility that the program might fail to achieve its dual purpose of raising revenue for the government and at the same time allowing non-compliant taxpayers the chance to correct their mistakes.
With less than four months away from the deadline of March 6, 2008, the clock is relentlessly ticking away, and there is only so little time left to make last-minute amendments to set the program in the right direction before this rare window of opportunity closes on both the BIR/Government and the taxpayers alike.
