By Jovee Marie N. dela Cruz

DESPITE opposition from foreign and local businessmen, the House of Representatives approved the proposed Tax Incentives Management and Transparency Act (Timta).

House Bill 5831, filed by Liberal Party Rep. Ma. Leonor Gerona-Robredo of Camarines Sur, seeks to monitor the tax incentives granted by the government to several companies.

In a position paper submitted to the House last week, 14 local and foreign business groups, which claim to represent 35,000 business establishments in the country, identified the provisions they want to scrap in the House’s version of the contentious Timta.

These provisions include the e-filing requirement of the Bureau of Internal Revenue (BIR); the slapping of “steep” penalties for nonsubmission of incentive claims during the prescribed period; and an extension of the BIR’s assessment period.

However, the lower chamber approved on second reading the proposed Timta, including the said provisions opposed by the business groups.

Under the bill, all registered business entities are required to file their returns and pay their tax liabilities using the electronic system of the BIR.

It added that application for income-tax holiday (ITH) or other income-tax-based incentives or both availment with the Board of Investments and other relevant investment promotion agencies (IPAs) shall be made within six months from the statutatory deadline (April 15) for filing of tax returns and only be accepted upon proof of filing of tax returns using the BIR electronic system; failure to make a valid application within said period results in forfeiture of incentives for the taxable period concerned.

The bill also grants the BOI a period of one year from filing of the application for availment of income-tax holiday or other income-based tax incentives or both to conduct validation of said application and make a recommendation to the BIR.

It mandates that the three-year prescriptive period of the BIR to make any assessment be toiled to 18 months for business entities registered with the BOI, beginning from the filing of tax returns up to the end of the one-year period of validation by the BOI of applications for availment of income-tax holiday; the said prescriptive, hence, runs not upon the filing of tax returns but upon the end of the one-year period for the BOI to make a validation of said applications for availment of ITH and other income-based taxed incentives.

The measure mandates the Department of Finance (DOF) to maintain a single database for tax incentives data submitted by the BIR and the Bureau of Customs for purposes of monitoring and analysis of tax incentives granted.

The bill also directs the DOF to submit to the Department of Budget and Management the actual, estimate, programmed and projected tax incentives, which shall thereafter be reflected by the latter in a section in the annual Budget Expenditure and Sources of Financing (BESF), to be known as the Tax Incentives Information section, and the BESF shall be referred to the President and Congress.

The measure also provides that the National Economic and Development Authority (Neda) is mandated to 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 bill also said that the repeated violations of the act shall be penalized with the cancellation of the registration of the registered 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.

Robredo said the approval of her measure is one big step to fight corruption in the government.

She also said the Timta is in support with the Aquino administration’s goal to fight corruption, as the measure seeks to promote transparency and accountability in the grant and administration of tax incentives.

“With the passage of this bill, all the agencies will now comply to one system of reporting. Also with this measure, we will now determine if the government loses or gains when it is giving tax incentives,” Robredo said.