Presidential Decree No. 1840 Granting Tax Amnesty For Taxable Years 1974 to 1980

October 1, 1981 REVENUE REGULATIONS NO. 18-81 SUBJECT : Presi dential Decree No. 18 40 Granting Tax Amnesty For Taxable Years 1974 to 1980 TO : All Internal Revenue Officers and Others Concerned Pursuant to Section 10 of Presidential Decree No. 1840 (P.D. 1840) which grants tax amnesty on untaxed income and/or wealth earned or acquired during the years 1974 to 1980 and which requires the filing of statement of assets, liabilities and net worth, the following regulations are hereby promulgated: SECTION 1 . Scope . These regulations cover all cases of voluntary disclosure of untaxed income and/or wealth earned or acquired during the years 1974 to 1980 and the filing of statement of assets, liabilities and net worth as of December 31, 1980 under P.D. No. 1840. SECTION 2 . Who may avail . This tax amnesty may be availed of only by the following taxpayers with untaxed income and/or wealth earned or acquired in 1974 to 1980: (a) Individuals who are: (1) Resident citizens; (2) Non-resident citizens; (3) Resident aliens; and (4) Non-resident aliens who are engaged in trade or business or practice of profession in the Philippines. (b) Estates and trusts. Married individuals who are not legally separated shall file a joint return. However, where it is impracticable for the spouses to file one consolidated return, each spouse may file his separate tax amnesty return. If the taxpayer is unable to prepare his own return, the same can be accomplished by his duly authorized agent or other person charged with the care of his person or property. In such a case, the taxpayer and his representative shall assume the responsibility for complying with the conditions for amnesty as stated in Section 6 hereof. The authority of the agent or representative shall be attached to the return. Parents or guardians shall file the amnesty returns for their minor or incapacitated children or wards. The administrator, executor or trustee shall file the return for the estate or trust. SECTION 3 . Meaning of untaxed income and/or wealth . The term "untaxed income and/or wealth" means all earnings, receipts, gifts, bequests or any other acquisitions from any source whatsoever which are taxable under the National Internal Revenue Code (NIRC), but knowingly or unknowingly, were not declared for internal revenue tax purposes in any year from 1974 to 1980, except as provided in Section 4 hereof. The term also includes overclaimed or unallowable deductions/exemptions claimed in returns filed for any of the years mentioned above on which no additional internal revenue taxes have been assessed, collected and/or paid as of September 17, 1980. SECTION 4 . Cases not covered by amnesty . The following cases are not covered by the amnesty subject of these regulations: (a) Criminal cases already filed in Court or with the Fiscal's Office on or before September 17, 1980; (b) Internal revenue tax cases involving civil liability which are the subject of a pending criminal action in the Fiscal's Office or the Court prior to September 17, 1980; (c) Withholding tax at source liabilities provided for under Sections 53, 54 and Chapter XI of Title II of the NIRC, and transfer tax cases under Title III of the same Code for which a certificate of clearance has not yet been issued as of September 19, 1981. For this purpose, a letter signed by the Commissioner or his duly authorized representative attesting to full payment of the transfer tax liability determined upon investigation shall be considered as a certificate of clearance; (d) Deficiency internal revenue taxes assessed on or before September 17, 1980. For this purpose, the date of issuance appearing in the assessment notice shall be deemed to be the date of assessment of the deficiency tax. SECTION 5 . Tax imposed . An amnesty tax equivalent to twenty per centum (20%) of the untaxed income and/or wealth declared shall be paid in lieu of all internal revenue taxes, including the increments and penalties on account of non-payment, imposed under the NIRC. In the case of individuals who are non-resident citizens the amnesty tax shall be two per centum (2%) of such previously untaxed income derived from sources abroad and converted into U.S. dollars. However, untaxed income and/or wealth derived from sources within the Philippines by such non-resident citizens shall be taxed at the rate of twenty per centum (20%). The amnesty tax paid by the taxpayer shall in no case be less than P1,000.00 per taxable year. Where an individual who is a non-resident citizen avails of the tax amnesty with respect to both Philippine-source income and foreign-source income, the 20% tax paid on Philippine-source income will be added to the 2% tax paid on foreign-source income in determining the P1,000.00 minimum. For this purpose, the amnesty taxes paid in U.S. dollars will be converted into Philippine pesos at the rate of P7.50 to U.S. $1.00. SECTION 6 . Conditions for amnesty . The tax amnesty granted under Section 1 of P.D. 1840 shall apply only under the following conditions: (a) Such previously untaxed income and/or wealth must have been earned or realized in any of the years 1974 to 1980; (b) The taxpayer must file an amnesty return on or before November 30, 1981 and fully pay the tax due thereon as prescribed in Section 5 and in the manner provided in Section 8, both of these regulations; (c) The amnesty tax paid by the taxpayer under P.D. 1840 shall in no case be less than P1,000.00 per taxable year; and (d) A statement of assets, liabilities and net worth as of December 31, 1980 in the prescribed form (BIR FORM 184 A), must be filed with the return, except as provided in Section 10(b), below. SECTION 7 . Return required . (a) Where to file The tax amnesty return of individuals who are resident citizens and aliens, estate and trusts, as well as the return of non-resident aliens engaged in trade or business or engaged in the practice of profession in the Philippines, shall be filed in the prescribed form (BIR FORM 1745 H) with the Office of the Regional Director, Revenue District Officer, Collection Agent or the authorized Municipal Treasurer designated as Collection Officer of the Bureau of Internal Revenue where the taxpayer has his legal residence or place of business in the Philippines, or if he has no legal residence or place of business in the Philippines, then with the Commissioner of Internal Revenue. In the case of individuals who are non-resident citizens, the tax amnesty return shall be filed with the nearest Philippine Embassy or Consulate abroad or with the Office of the Commissioner of Internal Revenue. BIR Form 1745 H-1 shall be used for untaxed income earned abroad and BIR Form 1745 H for untaxed income and/or wealth earned or acquired in the Philippines. (b) When to file The return must be filed on or before November 30, 1981. (c) What must be contained in the return The return must contain the following: (1) The taxpayer's name and address; (2) His taxpayer account number; (3) The nature and amount of untaxed income and/or wealth for each year; and (4) The amnesty taxes due thereon. SECTION 8 . Payment of the tax . The amnesty tax imposed herein shall be paid as follows: (a) If the amount due does not exceed P50,000.00, the tax must be paid at the time of the filing of the return; (b) If the amount due exceeds P50,000.00 but does not exceed P100,000.00, the tax may be paid in two equal installments, the first installment to be paid upon filing of the return and the second installment, on or before January 31, 1982; (c) If the amount due exceeds P100,000.00, the tax may be paid in three equal installments as follows: acd (1) The first installment shall be paid upon filing of the return; (2) The second installment shall be paid on or before January 31, 1982; and (3) The third installment shall be paid on or before March 31, 1982. (d) In meritorious cases, where the total amount due exceeds P300,000.00, the Commissioner of Internal Revenue or the Revenue Regional Director may, upon proper application, allow the taxpayer to pay the P300,000.00 in accordance with the immediately preceding schedule and the amount in excess thereof in equal monthly installments beginning June 30, 1982 up to but not later than September 30, 1982. If any installment is not paid on its due date, the whole unpaid amount shall become due and demandable and shall be subject to 20% interest per annum and a 10% surcharge. The corresponding letter of demand and assessment notice shall be issued immediately for the collection of the unpaid amount and any increment due thereon. Failure on the part of the taxpayer to pay the amount due within the time prescribed in the demand will result in loss of the immunities in accordance with Section 17 hereof. SECTION 9 . Immunities and Guarantees . Subject to the provisions of Section 4 hereof, upon compliance with all the conditions imposed in P.D. 1840 as implemented by these regulations, the taxpayer shall be relieved of any liability to any internal revenue tax otherwise due and payable on such untaxed income and/or wealth, including any increment thereto and penalty on account of non-payment, as well as from all civil, criminal or administrative liabilities under the NIRC arising from or incident to the filing of the tax amnesty return under P.D. 1840. Furthermore, the taxpayer shall not be subject to any internal revenue tax investigation for all taxable years covered by the amnesty return filed. His books of accounts and other records for the years covered by the amnesty tax return shall be considered closed and shall not be subject to any examination. Claims for refunds or credit of withheld taxes on wages will be processed subject to pre-audit for purposes of: (a) determining the mathematical accuracy of computations; (b) the existence of errors apparent on the face of the return; (c) the existence of double claims for refund/credit; and (d) the correctness of the taxes withheld, without the need for the examination of the taxpayer's record. However, the Commissioner of Internal Revenue may, upon written authority, order the examination of records in connection with the verification of a claim for tax refund or tax credit (except for withheld taxes on wages), tax incentives and/or tax exemptions under existing laws. Finally, the amnesty tax return shall not be used as evidence against or to the prejudice of the declarant for any other internal revenue tax purposes. SECTION 10 . Filing of net worth statement . (a) Who must file All individuals who are citizens, whether residing in the Philippines or abroad and aliens residing in the Philippines owning assets and/or properties amounting to P50,000.00 or more, as of December 31, 1980, shall file a statement of assets, liabilities and net worth as of December 31, 1980. Married individuals who are not legally separated shall file a joint statement. However, where it is impracticable for the spouses to file one consolidated statement, each spouse may file his separate statement. In the case of minors, insane and other incapacitated persons, the statement shall be filed by their guardians; in the case of estates or trusts, the statement shall be filed by the administrator, executor or trustee. For purposes of these regulations, "alien residing in the Philippines" means an individual whose residence is within the Philippines and who is not a citizen thereof. A taxpayer required to file the net worth statement who is availing of tax amnesty under P.D. 1840 has to file a statement of assets, liabilities and net worth as of December 31, 1980 in accordance with Section 6 of the Decree as implemented by this Section, regardless of whether or not he has filed such statement as of December 31, 1979 pursuant to P.D. 1740. On the other hand, a taxpayer who is required to file the statement of assets, liabilities and net worth but has not submitted such statement as of December 31, 1979 under P.D. 1740, must file the statement as of December 31, 1980 prescribed by P.D. 1840, irrespective of whether or not he is availing of tax amnesty under the latter Decree. A taxpayer who has already filed the statement of assets, liabilities and net worth required under P.D. 1740 but is not applying for tax amnesty under P.D. 1840, need not submit the statement of assets, liabilities and net worth as of December 31, 1980. (b) Who are not required to file The following individuals are not required to file statement of assets, liabilities and net worth: (1) An individual, the total value of whose assets and/or properties is less than P50,000.00; (2) Non-resident aliens engaged in trade or business or in the practice of a profession in the Philippines; (3) Public officers or government employees who are required to file statement of assets, liabilities and net worth under Republic Act No. 3019 otherwise known as the "Anti-Graft and Corrupt Practices Act", as amended by Presidential Decree Nos. 677 and 1288; (4) Diplomatic or consular representatives and officers of foreign governments; (5) Members of the Armed Forces of the United States Government in the active service who are stationed in the Philippines; and (6) Officials and officers, who are not citizens of the Philippines, of regional or area headquarters of multinational corporations, offshore banking units, agencies of the United Nations or foreign or international regional organizations established in the Philippines. SECTION 11 . Contents of net worth statement . The statement shall include all assets and liabilities of the individual, whether 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. The statement shall likewise show the net worth of the taxpayer. SECTION 12 . Valuation . (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 as of December 31, 1980. (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 as of December 31, 1980. (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 at the time of the exchange. (5) In the case of assets, whether real or personal, previously declared in the statement of assets and liabilities filed by the taxpayer pursuant to Presidential Decree No. 379 or 631, the value of such assets as declared therein shall be used. (b) Liabilities Liabilities or obligations which are legitimate and enforceable under the law, and reducible in sums of money as of December 31, 1980 shall be included in the statement. SECTION 13 . When and where to file The statement of assets, liabilities and networth required under these regulations shall be filed in duplicate on or before November 30, 1981 with the Revenue Regional Director, Revenue District Officer, Collection Agent or Treasurer designated as Revenue Collection Agent of the municipality where the filer has his legal residence or principal place of business in the Philippines, or if he has no legal residence or place of business in the Philippines, the statement must be filed with the Commissioner of Internal Revenue. In the case of non-resident citizens, the statement may be filed with the nearest consular office in the foreign country where they reside or directly with the Commissioner of Internal Revenue. SECTION 14 . Nature of declaration . The statement shall contain a declaration that the taxpayer or his duly authorized representative made it under the penalties of perjury. SECTION 15 . Amendment of amnesty return filed under P . D . 1740 . A taxpayer who has availed of the benefits granted under P.D. 1740 and its implementing regulations may take advantage of the tax amnesty provided for under P.D. 1840. He may either declare untaxed income in the same amounts reported under P.D. 1740 for any or all of the years from 1974 to 1979, or report additional untaxed income and/or wealth for the said years up to and including 1980. In either case, the taxpayer shall comply with all the conditions for amnesty prescribed by P.D. 1840. He shall attach to the amnesty return the following: (a) a copy of the amnesty return filed under P.D. 1740 and of the RTR/CR or ROR evidencing payment of the tax due thereon; (b) a statement of assets, liabilities and net worth as of December 31, 1980, unless he is exempt under Section 10 (b) of these regulations; and (c) a copy of the statement of assets, liabilities and net worth as of December 31, 1979 if he has filed one. Any amount previously paid under P.D. 1740 shall be allowed to be credited against the amnesty tax payable under P.D. 1840. SECTION 16 . Penalties for failure to file statement or rendering false or fraudulent statement . Any individual required to file the statement of assets, liabilities and net worth under the Decree who knowingly makes a false declaration or who deliberately fails to file such statement, shall, upon conviction, pay a fine of not less than five thousand pesos (P5,000.00) and suffer imprisonment of not less than two (2) years. SECTION 17 . Effects of failure to comply with requirements . Failure to comply with any of the requirements set forth in Sections 6 and 7 of these regulations shall nullify the immunities and guarantees provided for in P.D. 1840. The Commissioner of Internal Revenue shall, in such case, compute the internal revenue tax liabilities of the taxpayer in accordance with the tax rates prevailing during the taxable year, as provided for in the NIRC, on the whole amount of such previously untaxed income and/or wealth, and apply the penal provisions of the said Code. SECTION 18 . Penalty for unlawful disclosure . Except for internal revenue tax purposes, it shall be unlawful for any officer or employee of the Bureau of Internal Revenue or any government entity having knowledge of such declaration of assets, liabilities and net worth to disclose to any person any information relative to such declaration and any violation hereof shall subject such 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, or both, and shall be summarily dismissed from the service for cause. However, the said statement of assets, liabilities and net worth herein required can be published in the form of tabulations and summaries having no specific reference to the individual filing the statement. SECTION 19 . Disposition of returns . All returns filed pursuant to the provisions of these regulations shall be kept in a separate file of the Bureau of Internal Revenue, after the tax due thereon shall have been fully paid. The provisions of Section 81 of the NIRC, prescribing the manner and disposition of income tax returns and publication of lists shall not apply to the aforesaid returns. casia SECTION 20 . Repealing Clause . P.D. 1840 repealed or modified the provisions of P.D. 1740 and all other issuances pertinent thereto which are inconsistent therewith. However, those who have already filed the statement of assets, liabilities and net worth prescribed under P.D. 1740 and who are not availing of tax amnesty under P.D. 1840 need not file the statement required under the latter Decree. SECTION 21 . Effectivity . The provisions of these regulations shall take effect immediately. CESAR VIRATA Minister of Finance Recommended by: ROMULO M. VILLA Acting Commissioner