11 June 2012

Higher Tax Awaits SALN Filers With Dollar Deposits

Government officials and employees declaring the peso equivalent of their foreign currency bank deposits in their Statements of Assets, Liabilities and Net Worth (SALN) are liable to pay higher income tax, a tax expert said yesterday.
Under Section 24 of the Tax Code, any increase in net worth is taxable.
Former Revenue Regional Director Estrella Martinez, who has more than 32 years experience as a tax collector, said this tax principle will have a chilling effect on government personnel with skyrocketing net worth following the inclusion of their dollar or euro bank deposits in their SALN.
Martinez has prepared a two-page position paper on the issue as more and more government personnel are disclosing their foreign currency bank deposits in their SALN following the ouster of Chief Justice Renato Corona from his post for the alleged offense of failure to declare all his bank deposits in his SALN.

She said Section 24 (B) of the Tax Code imposes a 7.5-percent final withholding tax on foreign currency deposit.
However, she said when the foreign currency deposit is included in the SALN and converted into peso transaction, the net worth will sharply rise, thus subjecting it to the maximum income tax rate of 32 percent.
Corona cited the argument of Martinez as one of the reasons why he did not disclose his dollar bank deposits in his SALN.
Martinez said then that SALN only provides for peso declaration, claiming that during her long years at the BIR and as a technical assistant of then Ombudsman Aniano Desierto, she never encountered a government worker declaring in his SALN his foreign currency bank deposit.




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