Category: Economy 14 Aug 2014
Written by Catherine N. Pillas
The Senate Committee on Ways and Means gave the Department of Finance (DOF), Department of Trade and Industry (DTI) and investment promotion agencies (IPAs) one month to come up with their consolidated draft of the Tax Incentives Monitoring Transparency Act (Timta) and the Fiscal Incentives Rationalization bill.
Sen. Edgardo J. Angara Jr., chairman of the Committee on Ways and Means, said he decided to give a deadline to the two government agencies and the IPAs as their “inaction” is stalling the progress of the bills.
He said the committee is attempting to move the priority economic measures at a faster pace.
The committee conducted the fourth hearing for the Timta and fifth for the fiscal perks rationalization bill last Tuesday.
Finance Undersecretary for the Domestic Finance Group and Legislative Liaison Jeremias Paul Jr. said the DOF agrees that a deadline should be set in order for the bills to move forward.
Paul also said during the hearing that as far as the fiscal incentives bill is concerned, all the inputs of the DOF have already been finalized. However, they are still being reviewed by the DTI.
Paul declined to expound on the DOF’s proposed scheme to increase revenue collection, which is part of the tax-revenue study being requested by Angara from the DOF to get a clearer picture of the foregone revenues and how much could be recovered through the streamlining of incentives.
Angara is requesting for disaggregated figures from the DOF, covering the tax incentives given by the Board of Investments, the Philippine Economic Zone Authority (Peza) and other IPAs from 2011 to 2013.
According to the finance department, P144 billion worth of incentives were given in 2011, of which P116 billion were accorded through the Peza.
Peza Manager for the Promotions Group Elmer San Pascual said they are contesting the P116-billion figure, saying it should not reflect the importation of equipment and raw materials.
“The component of the taxes that they are paying to us is bigger than the income tax holiday that they are enjoying. We don’t know if the importation component was included in the P116 billion,” San Pascual said.
San Pascual said in 2011, Peza gave away P23.6 billion in incentives in the form of the income tax holiday. However, total revenues collected through the 5-percent tax on gross income in lieu of other national and local taxes amounted to P48 billion.
He reiterated the agency’s opposition to any change in the incentive structure of Peza.
Based on the documents obtained from the previous hearings, the finance department is vying for the following provisions to be incorporated in the fiscal incentives rationalization bill: a sunset provision in the grant of tax incentives as the government cannot perpetually subsidize investments; redundant instruments like the income tax holiday should be replaced by performance-based types of perks, such as the accelerated depreciation and longer carry-over losses.
On the Timta, the DOF proposal includes placing the incentives to be given by the IPAs under the Budget of Expenditures and Sources of Financing (BESF), an automatic appropriation that will not need congressional approval every year.
“Instead of putting it in the General Appropriations Act, it will now be included in the BESF; and since it is automatically appropriated, it will now be incorporated in the National Expenditure Program,” said Paul during the hearing.
The DOF draft also identified other mechanisms for tax-incentive reporting under the Timta, like the requirement of IPAs to collate and report the tax perks they grant to a central body.
Paul, however, did not give specific details.
Source: http://www.businessmirror.com.ph/index.php/en/news/economy/37124-dti-dof-ipas-given-30-days-to-finalize-inputs-on-perks-bills
Comment here