Press Release
January 29, 2019

Tax amnesty and higher BSP capitalization ready for Duterte's signature

Two measures, the tax amnesty bill and amendments to the Central Bank Act that were ratified by the Senate last December have already been transmitted to the office of President Duterte for his signature.

Enrolled copies of the two bills, one providing reprieve to taxpayers who have outstanding tax obligations in estate and general taxes for taxable year 2017 and prior years was sent to Malacanang last January 17, while the other, the New Central Bank Act which will strengthen the regulatory powers and increase the capitalization of the Bangko Sentral ng Pilipinas' (BSP) from P50 billion to P200 billion, was transmitted last January 15.

Under the Tax Amnesty Act of 2018, taxpayers can avail of a reprieve from all estate taxes on covered taxable years and pay a rate of 6 percent based on the total net estate.

Those who will avail of the amnesty program will be immune from payment of all taxes and the filing of civil, criminal and administrative cases and other penalties.

The measure is seen to encourage those in the formal and non-formal sector to legitimize, properly declare and pay the correct taxes without fear of civil, criminal or administrative penalties, the senator said.

The grant of general amnesty which shall cover all national internal revenue taxes, including value-added tax (VAT) and excise taxes collected by the BOC is also included in the bill.

In lieu of the taxes supposed to be paid, only 5 percent of the total net worth or a minimum of tax depending on the subscribed capital for corporations will be collected.

"Let it be known that this measure will overwhelmingly benefit the Filipino taxpayer, including the widow, widower or the children who can now easily settle the obligations of their deceased loved one's estate," Sen. Sonny Angara, Chair of the Senate Ways and Means Committee, said.

"This measure will also give the government, specifically the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC), an unprecedented opportunity to start anew, clean up their dockets and focus on their main mandate of collecting the funds necessary to power our nation's growth," he added.

Those who will avail of the tax reprieve will need to accompany their General Amnesty Tax Return with a notarized Statement of Assets, Liabilities and Net Worth (SALN). Discounts will also be granted for early availers.

Angara said the enactment of the tax amnesty bill is another step in the long quest toward an efficient and equitable tax system.

Sen. Chiz Escudero, chair of the Senate Committee on Banks, Financial Institutions and Currencies, justified the amendments, saying there is a need for the BSP to respond to contemporary challenges in order to remain effective in its conduct of monetary policy and supervision of entities within the financial system.

In funding its increased capitalization, the BSP's declared dividends will now be deposited in a special account and earmarked for the payment of BSP's increase in capitalization.

With the enactment of the bill, the BSP's supervisory power has been expanded as it now includes other categories of financial institutions.

It will also have full flexibility to conduct risk-based supervision of financial institutions and has been given more teeth in imposing administrative and criminal sanctions, to include, among other things, forfeiture of profits from unauthorized financial transactions.

It likewise has been granted authority to impose sanctions on transfers and acquisitions of substantial shares of banks and quasi-banks without its approval.

The BSP shall also have the authority to require from any person or entity "any data for statistical and policy development purposes in relation to the discharge of its functions and responsibilities although the release of such data shall be subject to prevailing confidentiality laws."

"An empowered BSP is indispensable in ensuring a competitive, robust and inclusive economy attractive to investments and business that generate employment and promote inclusive growth and a financial system that will support a higher quality of life for Filipinos," he said.

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