MALACAÑANG
M a n i l aPRESIDENTIAL DECREE No. 1740
CONDONING PENALTIES FOR CERTAIN VIOLATIONS OF THE INCOME TAX LAW UPON VOLUNTARY DISCLOSURE OF UNDECLARED INCOME FOR INCOME TAX PURPOSES AND REQUIRING PERIODIC SUBMISSION OF NET WORTH STATEMENT
WHEREAS, the Bureau of Internal Revenue has launched an extensive and thorough investigation of income tax returns for the purpose of ferreting out individuals who have under-declared their net taxable income for the years 1974 to 1979;
WHEREAS, individuals who, after investigation, are found to have incorrectly paid their income tax liabilities for the aforesaid years through deliberate of failure to report taxable income, willful understatement of gross income or intentional filing of claims for fictitious deductions or exemptions, will be assessed the 50% fraud penalty and thereafter will be prosecuted for purposes of seeking their conviction;
WHEREAS, there is a substantial number of individuals who have evaded payment of income taxes and who are now amenable to the filing of amended tax returns where they will voluntarily declare their true and correct...
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Presidential Decrees
Condoning Penalties For Certain Violations Of The Income Tax Law Upon Voluntary Disclosure Of Undeclared Income For Income Tax Purposes And Requiring Periodic Submission Of Net Worth Statem
Presidential Decree No. 1740
Summary of Presidential Decree No. 1740
Voluntary Disclosure of Correct Taxable Income
- Individuals who failed to file or filed false/fraudulent returns for 1974-1979 can file amended returns and declare true income, deductions, exemptions, and pay correct tax due. (Section 1)
- Applies to income tax liabilities for 1974-1979, except:
- Criminal cases already filed before the decree's effective date (Section 2a)
- Income tax cases involving civil liability subject to pending criminal action (Section 2b)
- Withholding tax liabilities (Section 2c)
- Deficiency taxes assessed before the decree's effective date (Section 2d)
Time and Manner of Filing and Payment
- Returns and tax payments must be filed/paid by March 15, 1981, following the Tax Code and Regulations. (Section 3)
- If tax due exceeds P50,000, it can be paid in installments:
- Over P50,000 to P200,000: two equal installments (first upon filing, second by May 15, 1981) (Section 4a)
- Over P200,000: three equal installments (first upon filing, second by May 15, 1981, third by June 15, 1981) (Section 4b)
- If any installment is not paid on time, the whole unpaid amount becomes due and subject to interest and penalties. (Section 4c)
Immunity from Penalties
- Individuals who voluntarily file and pay taxes under this decree are immune from civil or criminal penalties for failure to pay correct income tax for 1974-1979, unless the declared net taxable income is understated by 25% or more. (Section 5)
Filing of Net Worth Statement
- Individuals owning assets worth P50,000 or more as of December 31, 1979, and not required to file under other laws, must file a sworn statement of assets, liabilities, and net worth as of that date. (Section 6a)
- The statement must be filed by April 15, 1981, with the BIR office where the taxpayer resides or has a business, or with the nearest consular office for non-residents. (Section 6b)
- Asset values should be based on cost, fair market value at acquisition, or depreciated value for business assets. Liabilities should be enforceable obligations as of December 31, 1979. (Section 7)
Unlawful Divulgence of Information
- Information in the net worth statements cannot be published except in tabulated/summarized form without individual references. (Section 8a)
- Unauthorized disclosure of information from the statements is punishable by a fine of at least P5,000, imprisonment of at least 2 years, or both, and dismissal from service. (Section 8b)
Penalties
- Filing false or fraudulent amended/original returns is subject to penalties under Section 73 of the Tax Code. (Section 9)
- Failure to file or rendering false net worth statements is punishable by a fine of at least P5,000 and imprisonment of at least 2 years. (Section 10)
Implementation
- The Ministry of Finance shall promulgate necessary rules and regulations upon the recommendation of the Commissioner of Internal Revenue. (Section 11)
Voluntary Disclosure of Correct Taxable Income
- Individuals who failed to file or filed false/fraudulent returns for 1974-1979 can file amended returns and declare true income, deductions, exemptions, and pay correct tax due. (Section 1)
- Applies to income tax liabilities for 1974-1979, except:
- Criminal cases already filed before the decree's effective date (Section 2a)
- Income tax cases involving civil liability subject to pending criminal action (Section 2b)
- Withholding tax liabilities (Section 2c)
- Deficiency taxes assessed before the decree's effective date (Section 2d)
Time and Manner of Filing and Payment
- Returns and tax payments must be filed/paid by March 15, 1981, following the Tax Code and Regulations. (Section 3)
- If tax due exceeds P50,000, it can be paid in installments:
- Over P50,000 to P200,000: two equal installments (first upon filing, second by May 15, 1981) (Section 4a)
- Over P200,000: three equal installments (first upon filing, second by May 15, 1981, third by June 15, 1981) (Section 4b)
- If any installment is not paid on time, the whole unpaid amount becomes due and subject to interest and penalties. (Section 4c)
Immunity from Penalties
- Individuals who voluntarily file and pay taxes under this decree are immune from civil or criminal penalties for failure to pay correct income tax for 1974-1979, unless the declared net taxable income is understated by 25% or more. (Section 5)
Filing of Net Worth Statement
- Individuals owning assets worth P50,000 or more as of December 31, 1979, and not required to file under other laws, must file a sworn statement of assets, liabilities, and net worth as of that date. (Section 6a)
- The statement must be filed by April 15, 1981, with the BIR office where the taxpayer resides or has a business, or with the nearest consular office for non-residents. (Section 6b)
- Asset values should be based on cost, fair market value at acquisition, or depreciated value for business assets. Liabilities should be enforceable obligations as of December 31, 1979. (Section 7)
Unlawful Divulgence of Information
- Information in the net worth statements cannot be published except in tabulated/summarized form without individual references. (Section 8a)
- Unauthorized disclosure of information from the statements is punishable by a fine of at least P5,000, imprisonment of at least 2 years, or both, and dismissal from service. (Section 8b)
Penalties
- Filing false or fraudulent amended/original returns is subject to penalties under Section 73 of the Tax Code. (Section 9)
- Failure to file or rendering false net worth statements is punishable by a fine of at least P5,000 and imprisonment of at least 2 years. (Section 10)
Implementation
- The Ministry of Finance shall promulgate necessary rules and regulations upon the recommendation of the Commissioner of Internal Revenue. (Section 11)