April 26th, 2023
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) instructed the Bureau of Internal Revenue during the tax panel’s hearing today that the estate tax amnesty filing procedure should be simplified and digital, to allow more people to avail of the program, as the committee approved House Bill No. 7409, filed by Speaker Ferdinand Martin Romualdez along with other colleagues.
In his remarks to the House tax panel, Salceda said that “The task of Estate Tax Amnesty is to unlock enough value from idle and unsettled estates.”
“The task of the Estate Tax Amnesty, then, was not to collect taxes per se. After all, it is a forgiveness of certain tax receivables that should have been collected – notionally, making it a revenue-eroding measure,” Salceda explained.
“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 sounds, the dead cannot use or optimize assets. That task falls solely on the living,” Salceda added.
“As many of you know, unsettled estates can leave land and other assets idle and unused for years, if not decades.”
“The other idea underlying an estate tax amnesty is that most estates are not liquid – so heirs have to come up with cash that they may not necessarily have, or part with some portion of the estate of the deceased to settle the tax. Of course, for many estates, such as family homes or agrarian lands with liens, that might not be an option.”
“As a result of the difficulty of coming up with the cash to settle estates that are not liquid, many estates remain idle or unusable as collateral.”
Extension needed
Proponents of the House Bill approved today pushed for an extension of the estate tax amnesty, previously extended by RA No. 11569, for another two years.
“Now that the extended deadline—June 14, 2023– is upon us, we are informed that this tax amnesty is yet to be optimized. Families still struggle to comply with documentary as well as cash requirements. Hence, our leadership filed this measure to give more time to our constituents to clear their obligations.” Salceda said.
Salceda however said that the government should also look into the “non-tax barriers to filing an estate.”
“At the same time, I want the Committee to consider more proactive steps to optimize this second estate tax amnesty extension. I sincerely hope this will be the last time we extend RA 11213 – because it defeats the purpose of tax compliance if violations will always be forgiven.”
“The steps we can study include simplifying the filing procedure including the option to do it online, opening assistance centers in local governments, relief from the judiciary on rules for signing special power of attorney or SPAs for OFWs abroad, and other steps to address the non-tax barriers to expeditiously settling estates. I am also open to supporting an Estate Tax Amnesty helpline by the Bureau of Internal Revenue, to provide filing support for indigent families and smaller estates.”
“As you know, we are about to have an Estate Tax Amnesty for agrarian lands until 2025, under the New Agrarian Emancipation Act, which as we speak is about to be sent to the Office of the President for his signature. I am also working with the Department of Agrarian Reform to create a helpline for estate settlement for agrarian reform beneficiaries – and hope we can adopt similar measures for the general public through the BIR,” Salceda explained.
Salceda also recommended that the BIR and the DILG encourage local governments to enact local transfer tax and real property tax amnesties to facilitate transfers through the estate tax amnesty.
“Basically, we want assets to be in the hands of those who can make good use of them. That is a core economic principle,” Salceda said.