Policy and purpose statement
- The Government policy is to afford every opportunity for taxpayers to come within the fold of reforms under the New Society.
- The decree enlarges a previously expired tax amnesty program to allow taxpayers who did not avail themselves earlier or did not fully comply in their prior amnesty disclosures to come within the new coverage.
Coverage: who may avail and what triggers
- A tax amnesty is granted to any person, natural or juridical, who failed to avail of Presidential Decree No. 23 and Presidential Decree No. 157.
- A tax amnesty is also granted to a person who availed of Presidential Decree No. 23 and/or Presidential Decree No. 157 but failed to include all required declarations in those amnesty returns.
- The taxpayer must voluntarily disclose previously untaxed income and/or wealth under this decree.
- The covered previously untaxed income and/or wealth must include earnings, receipts, gifts, bequests, or any other acquisitions from any source whatsoever.
- The previously untaxed income and/or wealth must be or have been previously taxable under the National Internal Revenue Code and must have been realized here or abroad.
- The previously untaxed income and/or wealth must be earned or realized prior to 1973, subject to enumerated exceptions and special categories.
Tax amnesty scope: taxes and liabilities condoned
- The decree condones all internal revenue taxes including increments or penalties arising from nonpayment.
- The decree condones all civil, criminal, or administrative liabilities under the National Internal Revenue Code.
- The decree also condones liabilities under:
- the Revised Penal Code,
- the Anti-Graft and Corrupt Practices Act,
- the Revised Administrative Code,
- the Civil Service Laws and Regulations,
- immigration and deportation laws and regulations,
- and any other applicable law or proclamation.
- The condonation is tied to the taxpayer’s voluntary declaration of previously untaxed income and/or wealth under this decree, subject to the conditions and exclusions set out in the decree.
Covered periods and enumerated exceptions
- Previously untaxed income and/or wealth must be earned or realized prior to 1973, except the following categories:
- Capital gains transactions where the taxpayer availed of Presidential Decree No. 16, as amended, but did not comply with its conditions.
- Tax liabilities (with or without assessments) on withholding tax at source provided under Sections 53 and 54 of the National Internal Revenue Code, as amended.
- Tax liabilities with assessment notices issued as of December 31, 1973.
- Tax cases that are the subject of a valid information under Republic Act No. 2338 as of December 31, 1973.
- Property transferred by reason of death or by donation during the year 1972.
Amnesty tax rate and payment rules
- A tax of fifteen percentum (15%) is imposed on the declared previously untaxed income and/or wealth.
- The return must be filed with the Commissioner of Internal Revenue on or before June 28, 1974, showing the previously untaxed income and/or wealth in the prescribed BIR Form.
- The prescribed BIR Form filed under the decree must be kept confidential and must not be subject to verification and/or investigation.
- If the declared cash hoarded abroad forms part of the previously untaxed income and/or wealth, the cash must be repatriated and deposited with any bank in the Philippines or invested in any of the following within six (6) months from time of disclosure:
- Government bonds;
- Government securities;
- Government debentures;
- Bonds, notes, or other commercial papers issued by domestic corporations; or
- Any productive enterprise.
- Payment timing depends on the amount due:
- If the amount due is not exceed P10,000, the tax must be paid at the time of filing but not later than June 28, 1974.
- If the amount due exceeds P10,000 but does not exceed P10,000.00, the tax may be paid in two equal installments: the first upon filing but not later than June 28, 1974, and the second on or before September 30, 1974.
- If the amount due exceeds P50,000.00 but does not exceed P300,000.00, the tax may be paid in three equal installments on this schedule:
- first installment upon filing but not later than June 28, 1974;
- second installment on or before September 30, 1974;
- third installment on or before December 31, 1974.
- In meritorious cases where the amount exceeds P300,000.00, the Commissioner of Internal Revenue may grant extension for payment in equal installments, with:
- the first installment paid upon filing but not later than June 28, 1974; and
- the last installment not later than May 31, 1975.
- If any installment is not paid on its due date:
- interest is collected as part of the tax at 14% per annum from the due date to the date of payment, but payment must be made not later than three (3) months from the installment due date;
- if not paid within that three (3) months period, the entire amount—including all unpaid installments—automatically becomes due on that date;
- failure to pay the entire amount within thirty (30) days renders the amnesty granted null and void.
Immunities after payment; evidentiary and secrecy effects
- After the tax imposed under the decree has been paid, the taxpayer is not subject to any investigation—civil, criminal, or administrative—insofar as the previously untaxed income and/or wealth is concerned.
- After payment, the declaration under the decree shall not be used as evidence against, or to the prejudice of, the declarant in any proceeding before any court of law or any body, whether judicial, quasi-judicial, or administrative.
- After payment, the declaration shall not be examined, inquired into, or looked into by any person, government official, bureau, or office.
- The decree makes it unlawful for any person having knowledge of the declaration to disclose any information relative to the declaration.
Criminal penalties; administrative liability for officials
- Any violation of the unlawful disclosure rule subjects the offender to imprisonment of not more than five (5) years.
- Any government official or employee who inquires, questions, or attempts to inquire into the tax amnesty return filed pursuant to the decree commits grave misconduct.
- Grave misconduct under the decree makes the official or employee subject to summary dismissal from the service.
Implementation by regulations
- The Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, must promulgate the implementing regulations of the decree.
Relevance to prior expired amnesties
- The decree enlarges coverage because the periods granted under Presidential Decree No. 23 (as amended) and under Presidential Decree No. 157 had already expired.
- The decree covers taxpayers who did not avail of Presidential Decree No. 23 and Presidential Decree No. 157, and taxpayers who availed but failed to include all required declarations in their prior amnesty returns.