Executive Order No. 41 Granting Tax Amnesty For Taxable Years 1981 to 1985

August 27, 1986 REVENUE REGULATIONS NO. 14-86 SUBJECT : Executive Order No. 41 Granting Tax Amnesty for Taxable Years 1981 to 1985 TO : All Internal Revenue Officers and Others Concerned Pursuant to Section 9 of Executive Order No. 41 granting a one-time income tax amnesty based on increase in net worth from December 31, 1980 to December 31, 1985, and requiring the filing of statement of assets, liabilities and net worth, the following Regulations are hereby promulgated. aisa dc SECTION 1 . Scope . These Regulations shall cover all cases of voluntary declaration of increase in net worth for the tax year beginning 1981 and ending with the tax year 1985, and the filing of statement of assets, liabilities and net worth as of the said dates. SECTION 2 . Who may avail . This tax amnesty may be availed of by any natural or juridical person who has heretofore failed to declare the correct amount of taxable income from 1981 to 1985. SECTION 3 . Who may not avail . The following taxpayers may not avail themselves of the amnesty granted by Executive Order No. 41: (a) Former President Ferdinand E. Marcos and/or his wife, Mrs. Imelda Romualdez Marcos, their immediate family close relatives, subordinates, business associates, dummies, agents, or nominees, both here and abroad, or any person natural or juridical falling within the purview of Executive Order Nos. 1, 2 & 14; (b) Those with income tax cases already filed in Court; (c) Those with criminal cases involving violations of the Income Tax Law already filed in Court; (d) Those with withholding tax liabilities under the Internal Revenue Code, as amended, insofar as said liabilities are concerned; (e) Those with tax cases pending investigation by the Bureau of Internal Revenue arising from a valid information furnished under Section 316 of the Tax Code, as amended; (f) Those with pending cases involving unexplained or unlawfully acquired wealth before the Sandiganbayan . aisa dc (g) Those liable under Title Seven, Chapter Three (Frauds, Illegal Exactions and Transactions), and Chapter Four (Malversation of Public Funds and Property) of the Revised Penal Code, as amended. SECTION 4 . Declaration of Increase in Networth . (a) The taxpayer availing of the tax amnesty shall submit a sworn statement of increase in net worth in an amnesty tax return in the form prescribed therefor (BIR Form No. ___). (b) The term "increase in net worth" means the excess of net worth as of December 31, 1985 over the net worth as of December 31, 1980. (c) In the case of a corporate entity on the fiscal year basis, the increase in net worth shall mean the excess of net worth as of the end of his 1985 fiscal year over the net worth as of the beginning of his 1981 fiscal year. For this purpose all fiscal years beginning on or after August 1, 1980 shall be considered as fiscal year 1981 and all fiscal years ending on or before June 30, 1986 shall be considered as fiscal year 1985. (d) The increase in net worth of corporate taxpayers shall be reduced by the amount of additional contributions by stockholders to the capital account. However, stock dividends shall not be allowed as deductions from the increase in net worth. SECTION 5 . Contents of net worth statement . The statement shall include all assets and liabilities of the taxpayer, whether situated or incurred, as the case may be, within or without the Philippines. The assets shall include all properties, real or personal, tangible or intangible, whether or not used in trade or business. The liabilities shall include all known debts and obligations which are legitimate and enforceable, whether secured or unsecured, and whether or not incurred in trade or business. SECTION 6 . Valuation . The amount of assets and liabilities to be declared in the net worth statement shall be determined as follows: (a) Assets (1) Real Property . Real property shall be valued at cost of acquisition and improvement. However, depreciable real property used in trade or business shall be valued at acquisition or construction cost, less accumulated depreciation. (2) Personal Property . Personal property shall be valued at cost of acquisition. However, if the property is used in trade or business, it shall be valued at acquisition cost less accumulated depreciation. (3) Property acquired by gratuitous title . Property, whether real or personal, acquired by gratuitous title, shall be valued at fair market value on which tax was paid upon transmission as finally determined by the Bureau of Internal Revenue. However, if no such determination was made, then the fair market value of the property at the time of its transfer shall be deemed the cost thereof. (4) Property acquired by exchange . Property acquired by exchange shall be valued at the fair market value thereof at the time of the exchange. (b) Liabilities . Liabilities or obligations which are legitimate and enforceable under the law, and reducible to sums of money shall be included in the statement. (c) Foreign currency . Foreign currency assets and liabilities expressed in foreign currencies shall be converted into Philippine currency at the following rates of exchange: December 31, 1980 P7.90: $1 December 31, 1985 P18.60: $1 SECTION 7 . Filing of the amnesty tax return and payment of amnesty tax . (a) Filing of amnesty tax return . The taxpayer availing of the amnesty shall file the return required under these Regulations (BIR Form No. ____) with the Office of the Commissioner of Internal Revenue, Regional Director or Revenue District Officer on or before October 31, 1986. The taxpayer shall attach to the amnesty tax return the following: (1) Sworn statement of assets, liabilities and net worth as of December 31, 1985, or as of the end of the fiscal year 1985. (2) Certified true copy of statement of assets, liabilities and networth as of December 31, 1980 on record with the BIR. If a BIR recorded networth statement as of December 31, 1980 is not available, the taxpayer shall file a sworn networth statement as of that date which shall be subject to verification by the Bureau of Internal Revenue; in the case of corporations, a certified true copy of the Balance Sheet attached to the 1980 and 1985 income tax returns. (b) Determination of amount of amnesty tax . A tax of 10% shall be imposed on the increase in net worth defined in Section 4 (b) hereof . cd i (c) Payment of Tax . The tax imposed herein shall be paid as follows: 1. If the amount due does not exceed P50,000.00, the tax must be paid at the time of the filing of the return, but not later than October 31, 1986; 2. If the amount due exceeds P50,000.00 but is not more than P500,000.00, the tax may be paid in two equal installments, the first installment to be paid upon the filing of the return but not later than October 31, 1986, and the second installment on or before November 30, 1986; 3. If the amount due exceeds P500,000.00, the tax may be paid in three equal installments, to wit: a. the first installment shall be paid upon the filing of the return but not later than October 31, 1986; b. the second installment shall be paid on or before November 30, 1986; c. the third installment shall be paid on or before December 31, 1986. 4. If any installment is not paid on the due date thereof, there shall be collected as part of the tax upon such unpaid amount a surcharge equivalent to 25% of the unpaid amount, which must be paid not later than one month from the due date of such installment, otherwise the amnesty granted herein shall be rendered null and void. In no case shall a refund be granted. SECTION 8 . Immunities and Privileges . Upon payment of the tax herein prescribed, the taxpayer shall be relieved of any income tax liability otherwise due and payable on such increase in networth including any increment thereto and penalty on account of non-payment of the said tax, as well as of all civil, criminal, or administrative liabilities arising under the National Internal Revenue Code, as amended. Furthermore, the taxpayer's tax amnesty declaration shall not be used as evidence against, or to the prejudice of, the declarant in any proceeding before any court of law or body, whether judicial, quasi-judicial or administrative, in which he is a defendant or respondent, and such declaration shall not be examined, inquired or looked into by any person, government official, bureau or office. Finally, his books of account and other records for the tax years 1981 to 1985 shall not be subject to any examination for income tax purposes; except in connection with the verification of the validity or correctness of a claim of a grant of any tax refund, tax credit (other than refund or credit of withheld taxes on wages), tax incentives and/or exemptions under existing laws, upon written authority of the Commissioner of Internal Revenue. cd SECTION 9 . Treatment of unexplained increase in net worth after December 31, 1985 . Any person who avails of the amnesty shall enjoy the immunities and guarantees provided in Section 8 hereof with respect to the statement of assets, liabilities and net worth required to be filed hereunder. However, in the determination of his future tax liabilities, the net worth appearing on such statement shall be considered as his valid and correct net worth as of January 1, 1986, and any unexplained increase in his net worth after that date shall be considered as taxable income in the year when such increase was established or discovered. SECTION 10 . Penalties for divulgence of amnesty tax return and statement of assets and liabilities . (a) It shall be unlawful for any person having knowledge of the tax amnesty declaration containing the statement of assets, liabilities and net worth filed pursuant hereto to disclose any information relative to such declaration and any violation hereof shall subject the offender to a fine in the amount of not less than Five Thousand Pesos (P5,000.00) or imprisonment for not less than two (2) years nor more than five (5) years or both. (b) Any officer or employee of the Bureau of Internal Revenue or any government entity who would inquire, question or attempt to inquire into the tax amnesty declaration filed by any taxpayer pursuant to Executive Order No. 41 shall be guilty of grave misconduct for which he may summarily be dismissed from the service. SECTION 11 . Effectivity . The provisions of these Regulations shall take effect immediately. aisa dc JAIME V. ONGPIN Minister of Finance Recommended by: BIENVENIDO A. TAN Commissioner of Internal Revenue ATTACHMENT