The proposed sin tax bill and the new estate tax amnesty rules
Credit to Author: EUNEY MARIE MATA-PEREZ| Date: Wed, 05 Jun 2019 16:19:55 +0000
MTF Tax and Legal Seminar
Before I discuss today’s topic, I would like to invite everyone to our CPD-accredited legal and tax seminar scheduled on July 17, 2019. Please check our website, www.mtfcounsel.com or email us at info@mtfcounsel.com if interested. Topics will include customs and tax updates, data privacy and the new Revised Corporation Code.
Sin tax bill
The Senate of the 17th Congress passed on 2nd and 3rd reading the Senate Bill (SB) No. 2233, which proposes to increase excise tax on tobacco products. And we understand that during the last session of the House of Representatives last Tuesday, the House of Representatives adopted and concurred to the revisions or amendments proposed by the Senate. The enrollment of the bill will now ensue. Since SB No. 2233 has been certified by the President as urgent, it is expected that the President will sign the bill into law before the next Congress commences session in July. SB No. 2233 seeks to increase the excise taxes on tobacco products gradually from Php45 per pack starting January 1, 2020 to Php60 per pack starting January 1, 2023, plus a 5% increase each year effective on January 1, 2024.
Estate tax amnesty IRR
On the other hand, the Bureau of Internal Revenue (BIR), after conducting public hearings, issued Revenue Regulations No. 6-2019 (RR 6-2019) implementing the estate tax amnesty promulgated under Republic Act (RA) 11213, the Tax Amnesty Act. The issuance of such rules is crucial since the two-year window within which to avail of the amnesty commences from the effectivity of the IRR.
It should be noted that in the calculation of each decedent’s total net taxable estate, the properties comprising the gross estate shall be valued, in general, based on the fair market value as of the time of death of the decedent. If the property is a real property, the fair market value shall be the higher value between the zonal value as determined by the Commissioner of Internal Revenue and the fair market value as shown in the schedule of values fixed by the provincial and city assessors. The gathering of proof of the values of the properties comprising the estate can pose a challenge, especially if the decedent passed away several years ago. Any underdeclared properties, after the lapse of the two-year availment period, shall be subject to the regular estate tax rate, plus interest and penalties.
Other tax measures
It is now clear that there are a number of tax important tax measures not passed by the17th Congress which will have to be tackled by the 18th Congress, when they start sessions in July. These measures are as follows:
Tax in Mineral Products – Senate Bill 1979, in relation to House Bill 4800, otherwise known as An Act Establishing the Fiscal Regime for the Mining Industry, proposes to impose a royalty tax on both metallic and non-metallic mining operations conducted outside mineral reservations, whether large scale or small scale. The tax is proposed at at three percent of the market value of the gross output of minerals or mineral products extracted or produced for the first three years from the effectivity of the law, four percent on the fourth year and five percent on the fifth year.
The issue of this measure is the placing of non-metallic mining operations, which are differ from metallic mining operations in terms of the nature, use, importance and end-consumers of minerals produced.
Train Packages
Trabaho Bill (House Bill (HB) No. 8083 or the Tax Reform for Attracting Better and Higher Quality Opportunities Bill) – This bill was approved on third reading by the House of Representatives on September 10, 2018. The TRABAHO Bill is the second package of the government’s comprehensive tax reform program which proposes to gradually lower the corporate income tax rate and rationalize corporate incentives.
HB No. 8453, or the proposed Real Property Valuation and Assessment Reform Act – This bill mandates the Bureau of Local Government and Finance (BLGF) to develop and maintain a uniform valuation standard, consistent with international standards, which will guide local government appraisers and assessors in preparing their schedules of market value. This bill was already approved on third reading in the Lower House on November 12, 2018.
HB No. 8645, also known as the proposed Passive Income and Financial Intermediary Act — It seeks to make the tax system for the financial sector fairer, more efficient, and more regionally competitive. It was approved by the Lower House on third reading on December 4, 2018.
Since the sessions of 17th Congress have ended, it is expected that the government, especially our Department of Finance, will push for the passage of the above bills when the 18th Congress convenes in July. The government is of course hopeful that these measures will be acted upon by the next Congress and could still be passed within the year.
Euney Marie J. Mata-Perez is a CPA-Lawyer and the Managing Partner of Mata-Perez, Tamayo & Francisco (MTF Counsel). She is a corporate, M&A and tax lawyer. She is the President of the Asia-Oceana Tax Consultants’ Association. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. If you have any question or comment regarding this article, you may email the author at info@mtfcounsel.com or visit MTF Counsel’s website at www.mtfcounsel.com
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