DOF, DTI harmonize Timta positions

The Department of Finance (DOF) and the Department of Trade and Industry (DTI) have mended their conflicting positions on the proposed Tax Incentives Management and Transparency Act (Timta), with the submission of their joint version on Tuesday clearing the obstacles for the passage of the controversial measure.

House Committee on Ways and Means Chairman and Liberal Party (LP) Rep. Romero S. Quimbo of Mari-kina said Finance Secretary Cesar V. Purisima and Trade Secretary Gregory L. Domingo have signed their joint version of the Timta, which seeks to promote transparency and accountability in the grant and administration of  tax incentives.

The draft version of the bill, or “An Act Enhancing the Current Tax System by Implementing Measures that Ensure Transparency in the Management and Accounting of Tax Incentives Granted to Government and Non-government Entities,” was finalized during a meeting presided by Timta author LP Rep. Ma.  Leonor Gerona-Robredo of Camarines Sur between the DOF and the DTI on Monday.

“I don’t want to preempt but we are eyeing to approve Timta at the panel level on Wednesday [today],” Quimbo said.

He, however, said the joint DOF and DTI version is not yet the final version of the measure.

“I think what is important now is the two main departments that have different positions before are already in agreement…but as to whether their [DOF and DTI] final proposal is acceptable to everyone [here in the lower chamber], I cannot honestly say that,” the lawmaker said.

According to Quimbo, the House of Representatives is set to pass Timta on final reading before Congress’s sine die adjournment on June 11. The Timta is one of the priority measures of the 16th Congress.

Under the bill crafted by the DOF and the DTI, all registered business entities are required to file their returns and pay their tax liabilities using the electronic system used in the filing and payment of taxes.

The application for income tax holiday and/or other income tax-based incentives with the Board of Investments and other relevant investment promotion agencies (IPAs) shall only be accepted upon submission of the proof of filing of tax returns using the electronic system of the Bureau of Internal Revenue (BIR).

Data and information related to the tax-incentives claims of the registered business entities and the actual amount of tax and duty incentives granted submitted by the BIR and the Bureau of Customs to the DOF shall be maintained by the finance department under a single database for the monitoring and analysis of tax incentives granted.

“For the purposes of this act, tax incentives claimed shall refer to the incentives reflected in the tax returns filed by registered business entities with the BIR, as well as the tax and duty incentives reflected in the import entries of the IPA-registered firms,” the DOF-DTI bill said.

The measure also provides that the aforesaid data and information shall be reflected by the Department of Budget and Management (DBM) in the annual Budget of Expenditures and Sources of Financing (BESF), which shall be known as the Tax Incentives Information (TII) section.

The TII shall be limited to the aggregate data related to incentives availed of by registered business entities based on the submission of the DOF and concerned IPAs. The data will be categorized by sector, by IPA and by type of incentives.

The bill also directs the DBM to submit the BESF to the President and to Congress.

The measure also provides that the National Economic and Development Authority (Neda) shall conduct cost-benefit analysis on the incentives to determine the impact of tax incentives on the Philippine economy.

“All heads of the IPAs shall submit to the Neda investment-related data that shall include, but not limited to, the list of registered business entities, investment projects, investment cost, actual employment and export earnings,” the measure said.

The draft bill also said repeated violations of the act shall be penalized with the cancellation of the registration of the business entity.

“Any government official or employee who fails without justifiable reason to provide or furnish data or information as required under this act, shall be punished by a fine equivalent to that official’s or employee’s basic salary for a period of one month to six months, or by suspension from government service for not more than one year, or both, in addition to any criminal and administrative penalties imposable under existing laws,” it said.

The bill said any amount necessary to carry out the implementation of this act in the first year shall be sourced from the unprogrammed funds in the current General Appropriations Act.

Meanwhile, the House of Representatives approved on Tuesday two Palace priority measures—the Philippine Fair Competition Act and proposed amendments to the cabotage law. These bills are also backed by local and foreign business groups.

House Bill (HB) 5286, or “An Act Promoting a National Competition Policy for the Philippines, Prohibiting Anti-competitive Agreements, Abuse of Dominant Position and Anti-competitive Mergers and Acquisitions,” establishing the Philippine Competition Commission; and HB 5610, or “An Act Allowing Foreign vessels to Transport and Co-load Foreign Cargoes for Domestic Transshipment and for Other Purposes”; have been unanimously approved on final reading.

The fair-competition bill aims to minimize, if not totally eradicate, unfair competition, monopolies and cartels.

The bill also proposes to create the Philippine Competition Commission that will prosecute those engaged in unfair and deceptive trade practices, ,and other such practices with the purpose of preventing, restricting  or distorting competition.

Cabotage law

HB 5610, an act that allows foreign vessels to transport and co-load foreign cargoes for domestic transshipment and for other purposes, aims to promote competition in the shipping industry.

Under the bill, co-loading shall refer to arrangements between two or more international or domestic sea carriers, whereby a sea carrier bound for a specified destination agrees to load, transport and unload the container van cargo of another carrier bound for the same destination.

Currently, the 57-year-old Tariff and Customs Code of the Philippines said the right to engage in the Philippine coastwise trade is limited only to vessels carrying a certificate of Philippine registry.

The measure seeks to assist importers and exporters in enhancing their competitiveness in the light of intensifying international trade and to lower the cost of shipping containerized export cargoes from Philippine ports to international ports and containerized import cargoes from international ports.

Source: http://www.businessmirror.com.ph/dof-dti-harmonize-timta-positions/