02 February 2015

Till Death Do Us Pay

Pay Your Taxes
Even in death the Bureau of Internal Revenue (BIR) will haunt you. This after they have decided to look into the bank accounts of dead people to reach their target collection goal of PhP 50 billion by 2016.

BIR Commissioner Kim Henares said they will take advantage of a loophole in the Bank Secrecy Law to check taxable inheritance and boost estate tax collections from about PhP 1 billion a year to an average of PhP 12.5 billion.

An estate tax is a tax on the right of any given deceased person to transmit wealth to heirs. It is imposed on a given heir's inherited estate or assets if the value of the estate exceeds an exclusion limit set by law.

Republic Act 1405 or the Philippine Law on the Secrecy of Bank Deposits meanwhile states that accounts cannot be disclosed by banks and may not be examined except upon written permission of the depositor or if the money involved is the subject of litigation. Henares explained that bank accounts owned by the deceased are not protected by the law on bank secrecy because obviously, they have passed away. Heirs of the deceased can claim to enjoy bank secrecy either because technically, they don't own the assets of their deceased relative yet.

"The BIR wants everyone to become rich, so that we can collect more taxes. If you die, and you're rich, you pay more estate tax," Henares said.

Finance Secretary Cesar Purisma meanwhile said the low, static level of current estate tax collections contradicts rising property and stock princes.

Purisima also urged inheritors to amend their estate tax declaration and payments before they are caught. According to him, the government is set to investigate estate tax payments over the last five years.