May 21st, 2021
Salceda asks House leadership to ratify estate tax amnesty extension; House tax chief says Senate version is acceptable
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) in an aide memoire or short note to the House leadership, sought the ratification by the House of the Senate version of the two-year extension of the Estate Tax Amnesty Law.
“As Chair of the House Committee on Ways and Means, this representation poses no objection significant enough to merit the constitution of a bicameral conference committee,” Salceda said in his note to Speaker Lord Allan Velasco and Majority Leader Martin Romualdez.
The House of Representatives approved House Bill No. 7068, which provides a two-year extension of Republic Act No. 11213, otherwise known as the Estate Tax Amnesty Act, on Third Reading on September 15, 2020. The Senate approved its version under Senate Bill No. 2208 on Third Reading on May 20, 2021.
RA No. 11213 established a tax amnesty for unsettled estates and tax delinquencies. The deadline for the filing of applications for estate tax amnesty, based on the effectivity of the Implementing Rules and Regulations, was June 14, 2021.
The House sought to extend the estate tax Amnesty by two years, by amending the period prescribed under RA No. 11213 from “two (2) years from the effectivity of the Implementing Rules and Regulations of this Act” to four years. The Senate version similarly extends the amnesty, but specifies the extension period to be June 15, 2021 to June 14, 2023.
Economic impact
Salceda says that the estate tax amnesty extension will be a “vital piece of our COVID-19 bounce back puzzle.”
“The estate tax amnesty will be critical to economic recovery, as it would allow property owners with unsettled estates to access bank financing or to liquidate their property to finance other needs,” Salceda wrote.
“Having estates settled will unlock the value of such properties and allow credit arising from them to be used to finance economic activities. COVID-19 quarantines also took away significant filing time from potential filers for estate taxes, such that availers did not have full opportunity to complete the estate tax amnesty process for the entire period allowed by the law,” Salceda added.
Earlier during President Duterte’s term, in 2018, the Tax Reform for Acceleration and Inclusion (TRAIN) harmonized the estate tax to 6%. Salceda says that with the TRAIN rates, those who avail of the tax amnesty for estates not yet settled prior to the law will be able to do so at lower tax costs.
Key differences
The House version amended the deadline for the filing of estate tax amnesty applications from two years upon the effectivity of the IRR of the Act to four years. The Senate version explicitly states that the extension is from June 15, 2021 to June 14, 2023. “This is an acceptable revision with the same consequence,” Salceda wrote.
Meanwhile, the House version reinstated the provision that allows for just one return to be filed for estates involving multiple generations of decedents. This provision was vetoed in by the President when he signed Republic Act No. 11213.
“The Senate version deleted this provision. While this would have simplified filing, the President is likely to veto the same provision again if it were kept,” Salceda added.
The House version retains language in the law which states that “Proof of settlement of the estate, whether judicial or extrajudicial, shall likewise be attached to said Return in order to verify the mode of transfer and the proper recipients.” The Senate version deletes this requirement from the law.
“The matter is immaterial, as the Bureau of Internal Revenue can simply require such proof to be presented if so needed,” Salceda said.
Salceda is a principal sponsor of the measure in the House, and as Chair of the House tax committee, led its passage.