Estate tax collections target: P10-B a year from P1-B

MANILA, Philippines – The Aquino government has another target when it ends in 2016: increase estate tax collections to roughly P10 billion a year from just around P1 billion in previous years.

Finance Secretary Cesar Purisima, a former chief of SGV & Co., the country’s biggest audit firm that handled estate taxes of clients, told employees of the main tax collection agency on Wednesday, August 1, to hit that target.

“Estate tax collections have remained stagnant through the years. There are many areas for improvement. Maybe we can multiply [estate tax] collections by 10. Now, it’s hovering around P1 billion,” Purisima said in his speech during the 108th anniversary celebration of the Bureau of Internal Revenue (BIR).

Heirs of deceased persons are required to pay a tax equivalent to 20% of the estate of the deceased, but some try to escape this by withdrawing funds from the bank accounts of the deceased persons without declaring the incidence of death to their bankers.

BIR Deputy Commissioner Estela Sales shared that, in some cases, the tax agency encounters difficulty in collecting estate taxes because some of the heirs claim that they do not have enough cash to settle their tax dues.

But Purisima is undeterred. He said estate collections can go as high as P3 billion for only one person, thus total estate taxes can still significantly increase.

In the first 6 months of 2012, the BIR collected P521.16 billion, a 13.79% increase compared to the collections in the same period in 2011. BIR’s tax collections account for about 3/4 of the country’s total revenues. – Rappler.com