THE House of Representatives last Tuesday approved on second reading the proposal extending the availment of estate tax amnesty for another 2 years.
Through viva voce voting, lawmakers approved House Bill 7909 extending the period of availment of estate tax amnesty by two years as it postponed the deadline of application from June 14, 2023, and reset it to June 14, 2025, amending Section 6 of Republic Act (RA) 11213, as amended.
HB 7909 is expected to be approved on third and final reading next week.
The bill extends the coverage of availment of estate tax amnesty from those who died on or before December 31, 2017, to December 31, 2021, amending Section 4 of RA 11213 as amended.
The bill was principally authored by Speaker Martin G. Romualdez and House Committee on Ways and Means Chairman Jose Ma. Clemente “Joey” S. Salceda.
According to Salceda, an estate tax is a tax on the right of the deceased person to transmit the estate to lawful heirs and beneficiaries.
“The easier the assets can be passed on to their productive users, the better it will be for the economy,” Salceda said.
Family sensitivities
THE bill also seeks to amend the following: RA 8424 (National Internal Revenue Code of 1997, as amended by RA 10963 (Train Law); RA 11213 (Tax Amnesty Act); and, RA 11569, (An Act Extending the Estate Tax Amnesty and for Other Purposes, Amending Section 6 of RA 11213).
Under the current ecosystem, people seeking to avail the amnesty are expected to pay tax at a rate of 6 percent based on the decedent’s total net estate (or net undeclared estate if there’s a previously filed estate tax return) at the time of death.
On the other hand, if the allowable deductions applicable at the time of death exceed the value of gross estate, a minimum payment of P5,000, as the case may be, is expected.
RA 11213 was passed to provide taxpayers immunity from the payment of estate taxes until June 15, 2021.
However, Salceda said the pandemic hampered the settlement of estates, which to begin with, is inherently challenged by family sensitivities.
“To give people more time to settle estates, we extended the estate tax amnesty from June 15, 2021, to June 14, 2023, by enacting RA 11569 last Congress. We also streamlined the procedure by removing the requirement of proof of settlement in the payment of the estate tax under the same law,” he said.
Last time
SALCEDA said he hopes this will be the last time the Congress extends RA 11213—because it defeats the purpose of tax compliance if violations will always be forgiven.
Finance Assistant Secretary Dakila E. Napao had said the Department of Finance is supporting the passage of the measure given its laudable intention.
“Through this bill, those with unsettled or unpaid estate taxes are encouraged to clear themselves of their obligations and transfer the property to rightful heirs and help the government increase tax collections,” Napao said.
Although not a revenue measure, Napao said collections from the estate tax have reached P7.4 billion from 2019 to March 2023.
Bureau of Internal Revenue Assistant Commissioner Maria Luisa I. Belen earlier said the estate amnesty tax program has been an effective tool in achieving the State policy objectives of enhancing revenue administration and collections.
Belen said the proposed extension of the program will provide the much needed relief to taxpayers who are struggling to settle their tax obligation due to financial difficulties brought by the pandemic.