A look at the 2025 tax amnesty bills

By Senen Quizon and Eric Santos
 

The government has long utilized tax amnesty programs as a fiscal strategy to encourage voluntary compliance, broaden the tax base and generate much-needed revenues.

Recently, new general tax amnesty bills were filed in both the Senate and House of Representatives, offering a renewed opportunity to address historical tax deficiencies and undue burden on compliant taxpayers due to rigorous and excessive assessments. However, while these are seen to yield positive results, their success hinges not only on their legal framework but also on the trust and participation of taxpayers, particularly law-abiding businesses.

Senate Bill 60 and House Bill 2653, both filed in 2025, propose a general tax amnesty covering unpaid national internal revenue taxes for taxable years 2007 to 2024. The bills offer taxpayers the option to settle their liabilities by paying either 2 percent of their total assets or 5 percent of their net worth as of Dec. 31, 2024. These also provide immunity from civil, criminal and administrative cases for covered taxes and prohibit the Bureau of Internal Revenue from further examining the covered years.

These proposals follow a history of tax amnesty programs in the Philippines, which according to historical data have yielded significant revenue because of their simplified and inclusive nature. The 2006 General Tax Amnesty, according to the Congressional Policy and Budget Research Department, covered taxes up to 2005 and generated P7.15 billion in revenue. The 2019 Tax Amnesty Act covered taxes up to 2017 but had its general amnesty provision vetoed due to the absence of bank secrecy lifting and exchange of information mechanisms.

Several amnesty programs through different administrations have also been successfully implemented. The 2002 Voluntary Assessment and Abatement Program produced the biggest collection of P7.03 billion. The 1998 Voluntary Assessment Program (VAP) allowed taxpayers to amend returns and pay correct taxes without penalties, while the 1999 Economic Recovery Assistance Payment (ERAP) program ranted audit immunity to those who paid at least 20 percent more than their 1997 tax. These programs emphasized voluntary compliance without requiring asset or net worth declarations.

The challenges

A key issue in the 2025 bills is the proposed lifting of bank secrecy for one year. While intended to verify declarations and prevent abuse, this provision raises concerns among law-abiding businesses about their data privacy and the BIR’s capacity to safeguard sensitive financial information. Critics argue that audited financial statements and income tax returns already provide sufficient verification as certified public accountants audited and conducted bank confirmations and asset validations, among others.

Additionally, payment formulas based on total assets or net worth can be burdensome, especially for large businesses, small and medium enterprises (SMEs) and asset-heavy industries. These may not reflect actual tax liabilities or liquidity, making the amnesty less attractive.

To enhance inclusivity and encourage broader participation, alternative availment options should be considered. Drawing from the 1998 VAP and 1999 ERAP programs, the government should allow taxpayers to avail of amnesty by paying a fixed percentage above prior year taxes, granting immunity from audit those who paid more than 20 percent from previous-year taxes, or amending returns without requiring full asset disclosures. Such options would reduce the compliance burden, especially for SMEs, while still promoting revenue collection and voluntary compliance.

They, however, should pair this with adequate safeguards and post-amnesty enforcement, since — while such a scheme gives preference to taxpayers who pay a certain percentage more than their previous year’s taxes — offering audit immunity and waiving asset disclosures may weaken deterrence and encourage strategic underreporting.

Effectiveness and fairness of the tax amnesty program could be ensured through a formal dialogue with business groups, tax professionals, and industry stakeholders. This consultation will help validate proposed alternatives, address concerns and refine the framework to achieve optimal compliance and revenue outcomes.

The 2025 General Tax Amnesty offers significant benefits for businesses. These include legal immunity from past tax liabilities, protection from future audits for covered years and the opportunity to regularize tax compliance. For businesses with legacy issues or incomplete documentation, the amnesty provides a clean slate.

Moreover, early payment incentives of up to 20 percent further enhance the program’s attractiveness. However, to maximize participation, the program must balance enforcement with trust, ensuring that compliant taxpayers are not unduly burdened or discouraged by intrusive verification measures. Inclusive availment options and strong confidentiality safeguards will be key to the program’s success.

Senen Quizon is the business tax leader at Deloitte Philippines, a member firm of the Deloitte network. Eric Santos is a director with the Tax & Legal practice of Deloitte Philippines.