Settlement of estates undeniably proves the certainty of death and taxes. Fulfilling estate tax obligations entails tedious work, as it usually involves several properties transferring down different family lines. Consequently, it is often neglected resulting in tax obligations and penalties that increase with every failure to settle estates from generation to generation.
Congress provided affected taxpayers with a limited window of opportunity to settle estate tax obligations at a reduced rate and without penalties by enacting Republic Act 11213 or the Tax Amnesty Act on 14 February 2019. The estate tax amnesty covers the estate of decedents who died on or before 31 December 2017, with or without assessments issued therefor, and whose estate taxes have remained unpaid or have accrued as of the said date. The amnesty excludes delinquent estate tax liabilities that are already final and executory, those covered by tax amnesty on delinquencies, and properties involved in particular cases pending in courts.
A rate of six percent is imposed on each decedent’s total net taxable estate at the time of death at every stage of transfer of property. If an estate tax return was previously filed with the Bureau of Internal Revenue (BIR), this estate tax rate is imposed on the net undeclared estate, which is the difference between the total net estate valued at the time of the death of the decedent and the net estate previously declared with the BIR. The minimum estate amnesty tax for the transfer of the estate of each decedent shall be P5,000.
For Philippine residents and citizens, the gross estate shall be comprised of all properties, real and personal, tangible and intangible, wherever situated. For non-resident aliens, only real and personal properties situated in the Philippines are included. In ascertaining the decedent’s net taxable estate, the allowable deductions from the gross estate are those provided under the applicable tax laws at the time of the decedent’s death.
To apply for the tax amnesty, the sworn Estate Tax Amnesty Return (ETAR), together with the Acceptance Payment Form and other requirements, may be filed by the executor or administrator, legal heirs, or even the transferees and beneficiaries. The application must be filed within two years from the effectivity of Revenue Regulations 6-2019 on 15 June 2019, or not later than 15 June 2021. For resident decedents, the ETAR is filed with the Revenue District Office (RDO) having jurisdiction over the last residence of the decedent. For non-resident decedents, with an executor or administrator, it is filed with the RDO where such executor/administrator is registered or if not yet registered, at the executor/administrator’s legal residence. Finally, for non-resident decedents with no executor or administrator in the Philippines, it is filed with RDO 39 — South Quezon City.
Full compliance with all the legal requirements and procedures merits immunity from payment of all estate taxes, including increments and additions arising from the failure to pay any and all estate taxes for taxable year 2017 and prior years, as well as any civil, criminal and administrative cases and penalties. Just as important, it ultimately enables the transfer of title of properties to the heirs and beneficiaries.
Because of the Coronavirus disease (COVID-19) pandemic, availment of tax amnesty on delinquencies was extended from 22 June 2020 to 31 December 2020 under the BIR’s Revenue Memorandum Circular 61-2020. Hopefully, a similar extension would be granted for estate tax amnesty.
The availment of estate tax amnesty is a one-time opportunity in these uncertain times. It brings about a decidedly hopeful situation by offering a remedy beneficial for the stakeholders — a simplified tax relief for the taxpayer, heirs, and beneficiaries, and an astute remedy for enhancing revenue collection for the State.
Atty. Migmar Bernped S. Francisco is a Junior Associate of Parker Faustino Pagayatan Law Offices.
Migs obtained his Bachelor of Laws degree from San Beda College Alabang School of Law, and his Bachelor of Arts in Social Sciences degree from the University of the Philippines Baguio. While in law school, he worked as a legal researcher for various property management corporations and as a legal assistant for Haribon Foundation. His practice areas include corporate law and compliance, civil, criminal and administrative litigation and taxation.
Automakers sue US gov’t over tariffs on Chinese imports
Major automakers Tesla, Volvo, Ford and Mercedes Benz have sued to the US government over tariffs on Chinese goods, demanding customs duties paid on imports be returned, with interest.
The lawsuits were filed over the past days in the New York-based Court of International Trade and concern tariffs imposed by the US Trade Representative on imports from China, which Tesla in its filing called “arbitrary, capricious, and an abuse of discretion.”
The duties came amid a wider trade dispute between Washington and Beijing, and the automakers are asking for the tariffs to be revoked and any money paid to import parts returned.
Mercedes in its filing accused Washington of “prosecution of an unprecedented, unbounded, and unlimited trade war impacting over $500 billion in imports from the People’s Republic of China,” and argued US law “did not confer authority on defendants to litigate a vast trade war for however long, and by whatever means, they choose.”
US President Donald Trump’s administration engaged in months of trade conflicts with China, and imposed the levies as part of an effort to wean American manufacturers off Chinese technology/
China and the US signed their “phase one” trade deal earlier this year that partially ended the dispute, under which China promised to buy $200 billion in US goods and Washington backed down on tariffs on $160 billion in Chinese goods, particularly consumer electronics.
The US also slashed by half 15 percent tariffs on $120 billion in goods, but kept in place 25 percent duties on $250 billion in imports, which some of the automakers cited in their lawsuits.
Beijing has retaliated for these levies, while Washington is aiming both to reduce its trade deficit and reform Chinese business practices it considers “unfair.”
The Commerce Department reported the US trade deficit in July surged nearly 11 percent to $63.6 billion, with the deficit with China climbing to $28.3 billion.
Tax targets will be met
If there’s anything that this COVID-19 did, (it) is to inject a large amount of uncertainty.
While revenues posted a decline in previous months due to the pandemic, Department of Finance (DoF) Secretary Carlos Dominguez III expressed his confidence that the country’s top revenue agencies, the Bureaus of Internal Revenue (BIR) and of Customs (BoC) will surpass their targets.
“If there’s anything that this COVID-19 did, (it) is to inject a large amount of uncertainty but i believe that the new released targets will be (met) by the end of the year,” Dominguez said during the online Senate hearing for the agency’s 2021 budget.
According to him, the revised estimates on tax revenues have already been exceeded and that the P2.2 trillion tax revenue target for the year will be met.
Further, the DoF chief reiterated that the repackaged Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act will benefit the economy despite the eyed foregone revenues from its implementation.
“The proposal to reduce the (corporate) tax is really part of our stimulus program for the economy and really this is trusting the private sector to make the right decisions with that money, trusting them to retain their employees, reinvest in their companies and essentially, it will stimulate the economy,” Dominguez explained.
“Many countries have passed that… We have the highest corporate income tax (CIT) in the ASEAN at 30 percent, the average is actually around 22.5 percent so we would like to approach that and reach up to around 20 percent,” he added.
Savings to become investments
The Cabinet official cited corporate savings from the reduction of the CIT will create more investments for the country, which will generate more taxes in the long term.
Senator Christopher “Bong” Go expressed his full support to the proposed budget of the DoF during the budget hearing. That said, the Senator also sounded a stern warning against corrupt personnel of the DOF’s attached agencies, BoC and BIR, saying that “their days are numbered.”
“I express my full support to the DoF, headed by a very capable financial manager in Secretary Carlos Dominguez,” Go said during his manifestation of support to the department.
The Senator further expressed his confidence on the leadership of DoF and remarked that the country’s financial policies are in very capable hands.
“As the Philippines reels from the devastating effects of the pandemic not just on public health, but also on our economy and financial stability, it is important that the country’s finances are managed properly and efficiently,” Go explained.
“I am positive that we will see this crisis through and emerge stronger than ever,” he added.
MerryMart, Panda form dark grocery
‘Dark Grocery’ stores will generally be located in select hidden locations and are exclusively intended for online deliveries.
Recently introduced were cloud kitchens, now stay at home families have “dark groceries.”
Consumers will soon have the convenience of buying basic necessities amid movement restrictions due to the pandemic by ordering their needs via the “dark grocery” concept which will have branches that will generally be invisible and will solely cater to online deliveries within a certain vicinity.
The first two “dark grocery” stores are set to operate in the cities of Makati and Manila this October 2020.
This development came after MerryMart Grocery Centers Inc., a wholly-owned subsidiary of MerryMart Consumer Corp, yesterday signed an agreement with FoodPanda Philippines to operate and pioneer the “dark grocery” store concept in the Philippines with the aim of becoming the first 15-minute grocery delivery service in the country.
PandaMart is FoodPanda’s instant grocery delivery service which covers convenience grocery goods, personal care essentials and other fast moving consumer goods.
“This concept is a real game changer in the online grocery space, imagine being able to buy exactly what you need, when you need it, and for it to arrive at your doorstep in a very short span of time. We are glad to join forces with the global delivery platform FoodPanda to power this ‘dark grocery’ store concept as they are the leaders in the online food delivery space,” said MerryMart chairman Edgar “Injap” Sia II.
FoodPanda Philippines is operated by the Berlin-based Delivery Hero SE which operates in 51 countries all over the world.
“These ‘dark grocery’ stores will generally be located in select hidden locations and are exclusively intended for online deliveries, we see this initiative to complement the expansion of the brick-and-mortar MerryMart branches which will serve both delivery and walk-in customers,” added Sia.
“Our team and I will continue to be relentless and determined to nurture and exponentially grow both DoubleDragon and MerryMart in this new decade,” Sia added.
Coco plan boon to 16K farmers
Smallholder coconut farmers are expected to improve their yield after Century Pacific Food Inc. (CNPF), through its coconut manufacturing arm Century Pacific Agricultural Ventures Inc.
(CPAVI), signed a partnership with Friends of Hope for the donation of quality seedlings which will enable planting of productive coconut trees as replacement for old and non-fruit-bearing trees in South Central Mindanao.
In addition to expanding long-term coconut supply in the region, planting of new coconut trees can eliminate about 416,680 metric tons of greenhouse gas emissions over the next eight years, which the CNPF coconut subsidiary aims to make the region “carbon-neutral” by 2028.
Under the partnership, CPAVI will provide 100,000 coconut seedlings a year for the next five years, with Friends of Hope overseeing their distribution to farmer-beneficiaries and ensuring that the seedlings are cared properly.
CPAVI says Friends of Hope is a non-profit organization with expertise in coconut-based farming systems, including growing coconuts and other intercrops.
Since its establishment in 2012, it has reached almost 10,000 farmers, providing access to better seedlings, facilitating end-to-end trainings on coconut and intercrop production, and helping reduce costs by linking farmers directly to the markets.
Pandemic induces P40-B fiscal gap
Government spending for the month was slightly higher by 0.38 percent at P283.3 billion versus the P282.2 billion in August 2019.
The national government’s (NG) P40.1-billion budget deficit for August proved to be much wider year-on-year following lower revenue performance and higher spending to address the health crisis.
Latest data from the Bureau of Treasury (BTr) show NG deficit at P40.1 billion in August versus the recorded P2.5 billion deficit in the same month year-ago.
“This drove the year-to-date deficit to P740.7 billion, surpassing last year’s shortfall for the same period by P620.3 billion,” the agency said.
Government spending for the month was slightly higher by 0.38 percent at P283.3 billion versus the P282.2 billion in August 2019.
Higher for year thus far
On a cumulative basis, NG expenditures registered at P2.67 trillion, 20.79 percent higher than the posted P2.21 trillion in the first seven months last year.
Total revenues in August on the other hand, stood P243.2 billion, a 13.05 decline from the listed P279.7 in August 2019.
Bulk or 96 percent of the overall stock came from tax sources while non-tax collections accounted for the remaining 4 percent.
The Bureau of Internal Revenue managed to collect P187.9 billion for the month, reflecting an 8.59 percent decline year-on-year while year-to-date collection proved to be likewise lower at P1.30 trillion versus the P1.45 trillion in the same comparable period.
The Bureau of Customs generated P44.4 billion in August, 17.19 percent lower than the P53.6 billion in August 2019 owing to lower import volumes during the month. This brought cumulative collections of the agency at P347.3 billion, 15.55 percent lower than last year’s P411.2 billion.
The BTr also recorded a 65.3 percent drop in its August income with P2.1 billion compared to P5.9 billion last year owing to the sharp 81 percent drop in the Philippine Amusement and Gaming Corporation’s remittance to the agency.
The BTr’s collections on an aggregative basis managed to grow by 78.8 percent to P192.9 billion from only P107.9 billion year-ago.
Recession to remain
With the latest data set, ING Bank senior economist Nicholas Mapa offered his view of a prolonged economic recession, lasting until the end of the year.
“Despite a bounce in most economic indicators from the lows in April, we continue to expect the Philippine economy to remain in recession for at least the balance of 2020 as consumption and capital formation remain sidelined by double digit unemployment and as COVID-19 new daily infections keep consumers indoors,” Mapa explained.
“Government spending, which was the main driver of GDP (gross domestic product) in the second quarter will likely ease in the second half of the year as government officials pull back on spending to protect fiscal targets,” he added.
According to him, their minus 9.9 percent GDP outlook still holds while an appreciation bias for the peso could still be expected as import demand and local output will likely continue to fade.
Senate bill seeks CL as commerce hub
The whole area of Central Luzon will be a preferred place for investment.
Central Luzon is targeted as a regional investment and infrastructure hub in a bill recently filed in the Senate.
The bill identified the region as ideal for major trade and investment activities due to its strategic location as a gateway to Asia, its accessibility to three international airports, expanding infrastructure facilities and competitive industrial estates and economic zones.
Senator Richard J. Gordon, who sponsored the bill, started public hearings on it.
Gordon expressed optimism that Senate Bill 1549 or the Regional Investment and Infrastructure Coordinating Hub (RICH) of Central Luzon, once signed into law, would serve as an engine for economic growth and promote and encourage entrepreneurships and create various jobs and business opportunities for Filipino people.
Priority area for capital
“The whole area of Central Luzon will be a preferred place for investment. We could easily give a big contribution to the GDP (gross domestic product) once we generate investment. We revised the bill to give the usual incentive of five percent of the gross and that we will allow the governors and officials of the agencies to look for 200 to 300 hectare areas that they can plan on their own and develop. If this is approved, I am sure we can get the necessary investments in answer to what COVID has destroyed,” he said.
Similarly, Senator Christopher Lawrence “Bong” Go said, in a manifestation, that he fully supports the opening of a new airport in Bulacan.
Asian multinational San Miguel Corp. will put up a P735.6 billion airport project in Bulakan, Bulacan which will be an alternative to the congested Ninoy Aquino International Airport.
DTI: EU threat ‘hypothetical’
There is no reason for them to withdraw the GSP+.
The European Parliament’s proposal to impose sanctions on the country by taking away tariff privileges will not push through in the same way as similar threats were dismissed so many times in the past due mainly to Philippine government interventions.
Lopez in a remote interview said he doesn’t see the sanctions coming to pass since the EU Parliament is not the body that impose sanctions but the European Commission.
The EU provides emerging economies including the Philippines with scheme so-called generalized system of preference plus (GSP+) privileges that primarily allows tariff-free entry of exports.
“There is no reason for them to withdraw the GSP+. The European Commission is the one that runs the GSP+ privilege and not the EU Parliament. The EU commission has the system of monitoring countries that submit on compliance to I think 20 plus international conventions that we signed for,” according to Lopez.
The Department of Trade and Industry (DTI) chief noted that since the country has been faring well in terms of providing correct and factual information to the EU Commission, there is no indication of penalties from the economic bloc.
“So far we’ve been faring well where we are able to explain all issues that are raised every year and this is I think the third or 4th time that the EU Parliament has passed a similar resolution. Every year, however, we were able to give our side and explanation, give correct information and numbers. This should address the same as well,” he added.
Lopez also noted the EU Commission does not apply sanctions immediately and go through processes before implementing such endorsement.
“It is a big process of monitoring. They conduct monitoring visits and we accept their visits and answer all their questions. This is not the first time that this happen so we are addressing this. Everything is hypothetical,” Lopez explained.
The DTI chief has underscored the Philippines current GSP+ status and EU’s contribution to the economy, being the country’s 4th largest trade partner in 2019 that accounted for about nine percent of total trade.
“As you know the current export to EU is about 7.3 billion Euros. About 2.7 percent would be eligible for GSP+. We are able to place exports under GSP+ about 2 billion euros. Also there’s a good utilization rate for products that are eligible for GSP+. So that’s the magnitude of exports to EU right now,” Lopez said.
Gov’t mediation sought
The controversy alarmed local firms which exports to the economic community through the use of GSP+ perks. Groups including Trade Union Congress of the Philippines, Philippine Exporters Confederation Inc., the European Chamber of Commerce of the Philippines, and the Management Association of the Philippines also worried about the adverse impact of EU sanctions on local businesses.
These groups together called the attention of the government for serious intervention, as the looming sanction might affect their exports and the economy as a whole.
The GSP+ is a trade preference that allows for the duty-free entry of 6,274 Philippine products into Europe.
In return, the Philippines must commit to effectively implement 27 international core conventions covering labor rights, human rights, good governance and environmental concerns.
Last 17 September, the EU Parliament voted an overwhelming 626 against seven, with 52 abstentions, to approve a resolution to remove the Philippines’ trade benefits, due to the “seriousness of the human rights violations in the country.”
FoI and DPA
Preventing media from reporting public interest matters impairs its ability to perform its role in a democratic society.
Data privacy should be harmonized with the Freedom of Information (FoI). There is no contradiction between the two, and they should not be pitted against each other.
The symbiosis is highlighted by the declaration of state policy behind the Data Privacy Act (DPA), which protects the fundamental human right of privacy while ensuring the free flow of information to promote innovation and growth.
Data privacy and freedom of information are essential features of democracy and tools critical to serving the public interest. However, both are not without limitations.
Centrally, the media plays a crucial part in this process. Media is essential in creating an informed citizenry, strengthens good governance, accountability and participatory democracy. Thus, the role of media and journalists in balancing privacy and informing the public is vital. Free media is a pillar of democracy. The press must perform this arduous job of reporting on crucial public interest matters without violating individual rights such as privacy.
Many data protection officers (DPO) and FoI decision-makers in government have faced this acute challenge of weighing in on providing media the information they want. It’s a tough call. But preventing media from reporting public interest matters impairs its ability to perform its role in a democratic society. However, one must keep in mind that no right is unlimited or absolute, including freedom of information, the right to privacy, and even the media’s right to expression.
The DPA serves to protect personal data. At the same time, the freedom of information ensures full and public disclosure of information.
Both rights are complementary and significant in holding the government accountable to its citizens.
Freedom of information is more than just access requests to the government; it is about responsible data sharing. Open data will significantly improve government services and come up with new ones, supporting innovation and growth.
FoI is about sharing data, and data privacy is about caring for data. Both principles are about maximizing the beneficial use of data while preventing and mitigating risks that can harm citizens.
There are cases when the two complimentary rights overlap. When these happen, it is not privacy or the right to information that suffers, but the value of democracy itself.
There will be gray areas in applying these concepts in a wide array of government actions. Hence, in this age of post-truth, where opinions and popular belief dictate truth, information officers in government — DPO and FoI decision-makers — need to drive the government to protect the genuineness, accuracy and integrity of data, while ensuring the freedom of information.
We must shift the mindset from need to know to need to share. I don’t care about your data to full accountability. We do so to create an informed society and trusting a citizenry whose voice is the music of a resilient and robust democracy.
Thank you to all the DPO and FoI decision-makers who attended the 1st FoI-DPA Virtual Congress organized by the National Privacy Commission and the Presidential Communications Operations Office held recently. May your tribe increase.
Loans, grants for micro online firms
When the coronavirus pandemic struck the world early this year, online transactions thrived due to lockdowns and quarantine restrictions.
But not all sellers earn enough, hence a bill that will provide a range of support in the form of loans and grants, training, and registration assistance is most welcome.
Dubbed as saviors of the COVID-19 economy, online firms will benefit from HB 7698, or the Online Small Enterprise Support Services Act of 2020, which proposed that online businesses with less than P1 million in annual sales be eligible for loans from government banks, free credit reports, grants and training from the Technical Education and Skills Development Authority and other benefits and assistance.
“We will see far more unemployment and less poverty if Filipino households turn to small online businesses,” bill author Albay Rep. Joey Salceda said.
While online businesses have sprung up over the past few months, many are unregistered. Instead of punishing them for simply trying to make a living, Salceda wants them registered and assisted.
“If you’re a small online business, you serve the economy, whether registered or not, but we will offer generous benefits if you register and pay taxes. It’s a fair and humane deal,” he said.
Salceda is also the author of the Digital Economy Taxation Act, which targets large digital corporations to help fund COVID-19 efforts and improve the digital economy.
“The digital economy is the future. That is why we are already laying the building blocks for a strong digital economy. If we delay these reforms, we will face painful consequences as this segment of economy continues to grow,” he explained.
HB 7698 aims to provide adequate capital and credit access for individuals seeking to operate small online enterprises by mandating government banks to offer small business loans at competitive rates, and by providing small online businesses with free credit reports and credit scores.
It also aims to facilitate the registration and operation of such enterprises, and streamline government support services relevant to their needs, by creating a portal for all support services.