THE House of Representatives on Monday endorsed for Senate approval the bill extending the estate tax amnesty for another two years or until June 14, 2025.
A total of 259 lawmakers voted for approval of House Bill (HB) 7909, touted as benefitting almost a million families. These families were given additional time to avail the amnesty after the measure postponed the deadline of application from June 14, 2023, and reset it to June 14, 2025. HB 7909 effectively amended Section 6 of Republic Act (RA) 11213 (as amended).
The measure also seeks to expand the coverage of amnesty-eligible estates to those whose descendants died on December 31, 2021, from the current December 31, 2017, coverage.
“They [the one million families] have barely recovered from the Covid-19 pandemic, and the amnesty deadline, which had been extended once, is just a month away. It’s on June 14. Thus, the need for another extension,” Speaker Martin G. Romualdez said.
The Speaker appealed to the intended amnesty beneficiaries to take advantage of the new extension if the measure gets enacted into law.
He also urged the Bureau of Internal Revenue (BIR) to simplify the amnesty application procedure and allow online filing, especially for heirs who are overseas Filipino workers (OFWs).
“Let us not make the situation more difficult for them by extending the period for them to avail themselves of those benefits,” Romualdez added.
Faster distribution
ROMUALDEZ said that the payment of estate taxes would not only result in additional tax revenue for the government but in the faster distribution and use of inherited properties like land as well.
“It would unlock the potential for the development and economic utilization of those assets to the benefit not only of the heirs but of communities where those properties are located,” Romualdez said.
The bill 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.
Solely on the living
HOUSE Committee on Ways and Means Chairman Jose Ma. Clemente “Joey” S. Salceda explained that “the idea was to transfer estates more efficiently and more expeditiously, so that their value can be unlocked for better economic use.”
“As blunt as this sound, the dead cannot use or optimize assets; that task falls solely on the living,” Salceda added.
The lawmaker further explained that “unsettled estates can leave land and other assets idle and unused for years, if not decades.”
Salceda said that when the Estate Tax Amnesty was first enacted and then extended, some 133,860 individuals availed of the program from 2019 to 2023, bringing about P7.4 billion in collection.
The solon also cited the difficulty of settling estates as families tend to prioritize the expenses of funeral services and unpaid medical bills upon the death of a family member.
“The other idea underlying an estate tax amnesty is that most estates are in assets that are not liquid. Heirs have to come up with cash that they may not necessarily have, or part with some portion of the estate of the deceased,” Salceda said.
Unitary rate
ACCORDING to Salceda, many of the heirs encounter difficulty in raising cash “given the fact that you have to settle an estate right after losing a loved one.”
“And, if it takes them too long, they incur additional penalties, making it very difficult to actually settle estate tax obligations. That is the point of the 6-percent unitary rate without penalties or surcharges,” he added.
The lawmaker explained that RA 11213 was passed to provide taxpayers immunity from the payment of estate taxes until June 15, 2021.
“However, the pandemic hampered the settlement of estates. 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 [in the] 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,” Salceda explained.
The House Tax chairman emphasized, however, that almost a million families still have unsettled estates that could benefit from the measure.
“Now the deadline is about to come—June 14, 2023. But hundreds of thousands of families—I estimate as much as 920,000 Filipino families, still have pending estates to settle.”