THE House of Representatives (HOR) approved on third and final reading on Monday House Bill 8083, or the Tax Reform for Attracting Better and High-quality Opportunities or “Trabaho” bill.

At least 187 House members voted in favor of the second tranche of the Duterte administration’s tax- reform series, while 14 other representatives voted against the bill. Three congressmen, meanwhile, chose to abstain from the vote.

The three who abstained from the vote are Teddy Brawner Baguilat Jr. of the Lone District of Ifugao; Arnolfo A. Teves Jr. of the Third District of Negros Oriental; and Manuel F. Zubiri of the Third District of Bukidnon.

Of the 14 who voted against the bill, nine representatives explained their votes: Gabriel H. Bordado Jr. of the Third District of Camarines Norte; Arlene D. Brosas of Gabriela Party-list; Ariel B. Casilao of Anakpawis Party-list; France L. Castro of ACT Teachers Party-list; and Sarah Jane I. Ilago of Kabataan Party-list. The objectors also included Edcel C. Lagman of the First District of Albay; Romero Quimbo of the Second District of Marikina City; Tom S. Villarin of Akbayan party-list; and Carlos Isagani T. Zarate of Bayan Muna party-list.

80 individual amendments

The approved 102-page bill contained changes based on 80 individual amendments made after the HOR’s second reading of the bill.

The new version of the bill provided that, for registered enterprises within the premises of economic zones and free ports, tax remittances will be 15 percent between 2019 and 2020; 14 percent in 2021 and 2022; 13 percent in 2023 and 2024; 12 percent in 2025 and 2026; 11 percent in 2027 and 2028; and 10 percent in 2029 and thereafter.

This is accompanied by tax remittances worth 1.5 percent to the treasurer’s office of the province where the enterprise is, in lieu of the local business tax; and 1.5 percent to the treasurer’s office of the municipality or component city where the enterprise is, in lieu of business taxes.

If a business is in a highly urbanized city or independent component city, this 3-percent share of the LGU shall be directly remitted to the Treasurer’s office of the HUC or ICC.

VAT exemptions

The new version also provided that firms whose export sales are below the 90-percent threshold and are located within an economic zone will be allowed to avail themselves of value-added tax exemptions on importation and VAT zero-rating on domestic purchases of capital equipment and raw materials, provided they comply with electronic receipts or invoicing prescribed in the bill.

The Investment Promotions Agency (IPAs) are also required to pass to the Fiscal Incentives Review Board (FIRB) the list of registered enterprises annually, including firm-level data of provisions of the Tax Incentives Management and Transparency Act (Timta) law; the approved amount of investments and employment generation as well as other benefits annually from a firm-level basis; and approved amount of income and non-income tax incentives annually.

The bill also provides that for projects or activities that pose risks to the environment, health, and economic stability, and those that encounter “deadlocks” in the IPA Board, the FIRB will formulate policies on tax incentives; review their compliance with policies; approve their incentives on the basis of these instances; and suspend or cancel tax incentives granted to these firms.

No income tax

These amendments also included the removal of the provision mandating nonprofit educational and medical institutions to pay a 10- percent income tax, as well as the conditions of their exemptions.

The list of amendments also include the taxes, such as a 2-percent tax on gross receipts, imposed on franchises owned by radio and/or television broadcasting companies whose annual gross receipts of the preceding year do not exceed P10 million.

There were also a number of changes included in the section of tax incentives, such as specifications on terms of imprisonment on violations of economic sabotage; inclusion of the Strategic Investment Priority Plan (SIPP) in the governing provision for IPAs; and the inclusion of outsourced services used to produce final export goods in the export sales of goods.

In terms of the reduction of corporate-income tax for projects and activities under the SIPP, the rate of corporate-income tax will be reduced to 17 percent beginning January 1, 2021; 16 percent by January 1, 2023; 15 percent by January 1, 2025; 14 percent by January 1, 2027; and 13 percent by January 1, 2029.