Tax amnesty

During the crisis period financial difficulties of taxpayers as well as increased public expenditures may occur. Tax amnesties are considered necessary in order to collect at least some of the tax claims. It also helps relieve the taxpayers, who are unable to pay tax debts, and revive the market.

Possibility of tax amnesty may be used by political parties to gain more votes when the next election period is about to come. Determination of the extent of the amnesty is entirely political decision and is in the government’s power.

For resolving existing confusions, defective points of the system and making radical changes on the tax system liquidation of past periods may be necessary. It is also hard and administratively exhaustive to collect tax debt from taxpayers in financial difficulties. Tax courts have heavy job workload and collecting of taxes takes a long time. Tax amnesty is easy and beneficial way to solve these administrative difficulties.

In 2014, in the first amnesty ever offered in Australia, thousands of rich Australian came forward to declare billions of dollars in untaxed assets and income stashed in bank accounts in Switzerland and in other countries. The vast majority of voluntary disclosures were related to income and shares.[6][7]

In 2004 the Belgian Parliament adopted a law allowing individuals subject to Belgian income tax to regularize the undeclared, or untaxed, assets they held before June 1, 2003.[8]

Canada has a tax amnesty under both the Income Tax Act for income tax related offences and under the Excise Tax Act for GST/HST (goods and services tax/ harmonized sales tax) matters. The tax amnesty is referred to by the Canada Revenue Agency as the Voluntary Disclosure Program (VDP) and has its statutory authority under subsection 220(3.1) of the Income Tax Act and the sections 88 and 281.1 of the ETA which set out the rules for taxpayer relief applications. This relief is available for a 10-year period prior to the date of filing and covers unfiled tax returns and unfiled information returns such as offshore asset forms T1135 or T1134, as well as tax evasion in the form of unreported income or over claimed expenses or deductions. Eligible taxpayers will receive full penalty relief, will avoid any possible tax evasion prosecution and may obtain some interest reductions. [9]

In 2004 Germany granted a tax amnesty in connection with tax evasion.[10]

On September 30, 2010, the Hellenic Parliament ratified a legislation pushed through by the Greek government in an effort to raise revenue, granting tax amnesty to millions of Greek citizens by paying just 55 percent of the outstanding debts.[11][12][13] In 2011, the European Commission requested Greece to modify its tax legislation as its tax amnesty was considered discriminatory and incompatible with European Union treaties.[14]

Government of India allowed the people to declare their undisclosed incomes in Income Declaration Scheme, 2016 and pay a total of 45% tax for one time settlement. 64,275 disclosures were made amounting to ₹652.5 billion (US$9.4 billion).

After several tax amnesties program launched in 1964, 1984 and 2008, Indonesia has applied another tax amnesty in 2016. Finally, after 3 consecutives 3 months periods in 2016 and 2017, ended on March 31, 2017, repatriation commitment was Rp 146.6 trillion, but the realization was Rp 128.3 trillion or about $9.61 billion.[15] While asset declaration was Rp 4,855 trillion from 956 thousands tax payers.[16] The result is very successful. It is new world record, tumbles 2009 Italy tax amnesty program with Rp 1,179 trillion and repatriated Rp 59 trillion.[17]

Italy introduced a tax amnesty in 2001 that came to be known as Scudo Fiscale (English: Tax Shield), which was extended in 2003.[18]

In 2009 the Italian tax amnesty subjected repatriated assets to a flat tax of 5%.[19] In total around €80 billion in assets were declared, which resulted in tax revenues of €4 Billion.[20] The Bank of Italy estimated that Italian citizens held around €500bn in undeclared funds outside the country.[21]

It was introduced during Budget 2019 announcement on 2nd November 2018. [22]

Pakistan introduced tax amnesty scheme in 2018 which yield $ 1 billion or Rs 121 billion tax revenues from individuals, Association of Persons & Corporations who declare their assets in this scheme. [23]

The Philippines introduced The Tax Amnesty Act of 2019 or the Republic Act No. 11213[24] which was signed into Law on February 14, 2019 with a Veto Message of President Rodrigo R. Duterte. The said Law was published on the Official Gazette on February 18, 2019 and took effect on March 5, 2019, that is, on the 15th day after the official publication. As a result, the Bureau of Internal Revenue which is the main collecting agency of the government, published the implementing rules and regulations on the availment of the tax amnesty, two of which are the Revenue Regulation No. 4-2019 : Amnesty on Tax Delinquencies[25] which was issued on April 5, 2019 and Revenue Regulation No. 6-2019 : Estate Tax Amnesty[26]which was issued on May 29, 2019.

Portugal introduced tax amnesties in 2005 and 2010.[27]

In 2007, a Russian tax amnesty program collected $130 million in the first six months. The Russian program was not open to anyone previously convicted of tax crimes such as tax evasion.[28]

In 2003 South Africa enacted the Exchange Control Amnesty And Amendment of Taxation Laws Act, a tax amnesty.[29]

In 2012 the Spanish Minister of Economy and Competitiveness Cristóbal Montoro announced a tax evasion amnesty for undeclared assets or those hidden in tax havens. Repatriation would be allowed by paying a 10 percent tax, with no criminal penalty.[30]

Many U.S. states have had tax amnesties.[31] The City of Los Angeles collected $18.6 million in its 2009 tax amnesty program, claiming that the amount was $8.6 million more than was expected and that businesses saved $6.7 million in penalties.[32] The state of Louisiana brought in $450 million from its 2009 tax amnesty program, three times more than what was expected, according to Republican Governor Bobby Jindal.[33]

The IRS Criminal Investigation Division has had a longstanding practice of granting tax amnesty to taxpayers who have committed tax crimes, usually tax evasion. Following World War II, it was the administrative policy of the Internal Revenue Service to provide amnesty from criminal prosecution to taxpayers who voluntarily disclosed their underpayment of taxes.[34] Although protected from criminal prosecution, such taxpayers still were subject to any civil penalties or interest that applied with respect to the delinquent taxes.[35]

In a 2007 United States Senate bill that did not become law, a tax amnesty for illegal immigrants was proposed. The tax amnesty was supported by then-president George W. Bush and his Homeland Security Secretary Michael Chertoff.[36]

On June 26, 2012, IRS Commissioner Doug Shulman said the IRS offshore voluntary disclosure programs has so far collected more than $5 billion in back taxes, interest and penalties from 33,000 voluntary disclosures made under the first two programs.[37]