Here comes the SALN ______________________ By Manuel P. Salvador III
“Here comes the Sun. I am almost certain that not a few of us are familiar with this song which was composed and performed by guitarist George Harrison of the Beatles. The song may mean different people but it does not seem to promote the universal message of hope brought about by the coming of a new day. For Philippine taxpayers beset by tax problems who are hoping that such a new day will come, perhaps this new day has arrived with the passage into law of Republic Act No. 9480, also known as the Tax Amnesty Law. This piece of legislation, in accordance with our Constitution, quietly lapsed into law without the President’s signature. Various views have been offered on the propriety and wisdom of the law and whether or not it would be welcomed in much the same way as prior tax amnesty programs of the Government which, depending on who is offering an opinion, have been characterized as being either successful or unpopular. However, there are certainly a number of taxpayers who may stand to benefit from the Tax Amnesty Law. Since the passage of the law, I have entertained inquiries from persons who wanted to know if they could avail themselves of the benefits of the law and what steps they needed to take in order to comply with its requirements. At that time, no regulations implementing the Tax Amnesty Law had been issued and thus, for some time it was still uncertain how the Government would go about rolling out this initiative. All this changed on August 15, 2007, when the Department of Finance issued Department Order No. 29-07 which formalized the rules and regulations implementing RA 9480. The regulations will take effect 15 days after its publication in two newspapers of general circulation. Under the law and its regulations, a taxpayer would have six months from the effectivity of the rules within which to avail of the Tax Amnesty Law.
House of the Rising SALN To avail of the benefits of the Tax Amnesty Law, a taxpayer is required to pay an amnesty tax equivalent to five percent of their total declared net worth as of December 31, 2005, as declared in the SALN or the resulting increase in the net worth by amending such previously filed statements for purposes of the tax amnesty, thereby including still undeclared assets and/ or liabilities as of December 31, 2005. The Amnesty Law prescribes a minimum amnesty tax payment in accordance with a schedule provided in the regulations and shall be payable in case this minimum amnesty tax is higher than the amnesty tax payable based on the net worth as declared in the SALN. One of the interesting features of the regulations is the provision which outlines the requirements on what the SALN must contain. For a taxpayer to be complaint, it requires that the SALN must contain a true and complete declaration of assets, liabilities and net worth of the taxpayer as of December 31, 2005. The regulations require that a taxpayer include assets that are located within, as well as outside, the Philippines. This would include real or personal property. If real property is included in the SALN, it will have to include a description of their classification and exact location. The value of real property acquired through purchase shall be the acquisition cost, while those acquired by inheritance or donation shall be based on the zonal valuation or fair market value, whichever is higher. Personal property included in the SALN shall have a specific description of the kind and the number of assets or other investments, indicating the acquisition cost less depreciation or amortization if acquired by purchase, or the fair market value at the time of receipt if acquired through inheritance or donation. In addition, assets denominated in foreign currency shall be converted into corresponding Philippine currency equivalent prevailing as of December 31, 2005.
After every storm the SALN will shine It appears that by availing of the benefits of the Tax Amnesty Law, a taxpayer may stand a chance of weathering the storm that tax problems present. What evidently is the biggest benefit from availing of the Tax Amnesty Law is immunity from the payment of taxes, increments and penalties arising from the failure to pay any and all internal revenue taxes fro taxable year 2005 and prior years. This would be most beneficial for entities that have pending and unresolved tax assessments for the years covered by the Tax Amnesty Law. Additionally, the SALN shall not be admissible as evidence in all proceedings that pertain to taxable year 2005 and prior years, insofar as such proceedings related to internal revenue taxes, before judicial, quasi-judicial or administrative bodies in which he is a defendant or respondent and, except for the purpose of ascertaining the net worth beginning January 1, 2006, the SALN shall not be examined, inquired or looked into by any person or government office. However, the taxpayer may use SALN as evidence for his defense, whenever appropriate, in cases brought against him. It also appears to insulate the taxpayer from further tax investigation by the BIR. By availing of the Tax Amnesty Law, the books of accounts and other records of the taxpayer for the years covered by the tax amnesty availed of shall not be examined by the BIR. However, the Commissioner of Internal Revenue may authorize the examination of the said books of accounts and other records to verify the validity or correctness of a claim for any tax refund, tax credit (other than refund or credit of taxes withheld on wages), tax incentives, and/or exemptions under existing laws. It also appears that the regulations provide adequate safeguards to ensure the confidentiality of the information provided in the SALN as it imposes fines of not less than P50,000 as well as imprisonment of not less that six years but not more than 10 years for unlawfully divulging the contents of the SALN unless the disclosure is made at the request of Congress and in aid of legislation in accordance with the provisions of the Tax Code.
SALN damage The regulations clearly underscore the importance of filing an accurate SALN as the consequences of purposely filing inaccurate information in the SALN can be quite onerous for a taxpayer. In addition to not being able to avail of the benefits of the Tax Amnesty Law, there may be criminal penalties that can be imposed under certain circumstances when a taxpayer purposely files an inaccurate SALN. A person who has filed a SALN that willfully understates his net worth to the extent of 30 percent or more shall, upon conviction, be subject to the penalties of perjury under the Revised Penal Code. In addition, the willful failure to declare any property in the SALN and/or in the Tax Amnesty Return shall be deemed a prima facie evidence of fraud and shall constitute a ground upon which attachment of such property be issued in favor of the BIR to answer for the satisfaction of any judgment that may be acquired against the declarant. Further, an immediate tax fraud investigation may be conducted to collect all taxes due. Partners, officers-in-charge and employees may be held responsible for these violations in cases where juridical entities avail of the Tax Amnesty Law but are found to have underdeclared its net worth.
Taxman “Should five percent appear too small Be thankful I don’t take it all ‘Cause I’m the taxman, yeah I’m the taxman” Since I started this piece with trivia on a Beatles tune, I think that it is apt to end it on a similar note (pun intended) titled “ Tax Man.” I have read that he composed the song when he became aware of how much taxes he was paying from his earnings as a musician. I am certain that the dearly but it does seem quite amusing that the line does appear to allude to it. For certain taxpayers, paying the five percent the Tax Amnesty Law provide. However, successfully availing of these benefits would certainly depend on the taxpayer’s honesty and willingness to make an accurate disclosure in its SALN and of the efficiency by which the government implements the Tax Amnesty Law. |