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Philippines Tax Amnesty Approved

by Mary Swire,, Hong Kong

30 August 2007

The government of the Philippines has announced that implementing rules and regulations to bring about the General Tax Amnesty Law have been approved by the Minister of Finance.

According to the government, the Tax Amnesty Law, which has been approved by Congress, will give a one-time opportunity for all taxpayers to settle their tax obligations.

The Tax Amnesty covers all national internal revenue taxes for the taxable year 2005 and prior years. The scheme covers most types of taxpayer in the Philippines, including: individuals, whether resident or non-resident; estates and trusts, corporations, cooperatives and tax-exempt entities.

However, the tax amnesty will not apply to: withholding agents with respect to their withholding tax liabilities; or pending cases falling under the jurisdiction of the PCGG, involving unexplained or unlawfully acquired wealth, revenue or income under the Anti-Graft and Corrupt Practices Act, involving violation of the Anti-Money Laundering Law, or filed in the Department of Justice for tax evasion.

Taxpayers who have fully complied with the conditions of the amnesty law will be immune from the payment of taxes and additions thereto, as well as civil, criminal, and administrative penalties.

The amnesty tax rate is 5% of a taxpayer’s total declared net worth, or increase thereof in proper cases, as of December 31, 2005, or a specified minimum amount, whichever is higher. In general, the absolute minimum is pegged at P50,000 (US$1,070), save in the case of corporations, wherein the same may be as low as P25,000 or as high as P500,000, based on the amount of subscribed capital.

The government said that taxpayers can begin to apply for amnesty 15 days after the implementing rules and regulations are published. The amnesty will then be in operation for 6 months.

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