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Fast-tracked tax measures

“Citira was also read on 2nd Reading last Monday, signifying that it may be approved on Third and Final Reading very soon.
Appropriations Budget approved on Third and Final Reading.

Darren M. de Jesus

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Multi-tasking House Members managed to hurdle budget briefings in the level of the House Committee on Appropriations in an innovation introduced by Speaker Alan Peter Cayetano. Never done before in the House, simultaneous committee hearings were held, allowing more than one Department to be heard at a time. What happened is the Chairman of the Committee on Appropriations, Rep. Isidro Ungab, opened the hearing, say for example at 9 a.m., give his opening remarks, then leave to open his next hearing 30 minutes later. Rep. Ungab will leave a team of Congressmen for each committee, led by a designated Vice-Chairman of Appropriations.

With this system, budget briefings in the committee-level finished in record-breaking time, beginning on 22 August, ending on 6 September. Yesterday, 10 September, the plenary deliberations of the budget started early at 1 p.m., and the House will maintain this 1 p.m. schedule until 18 September. After this, there will be another round of deliberations in the plenary level, but most of the contentious matters should have been exhausted by then. Thus, the House is well in its way of beating its self-imposed deadline of 9 October, the last scheduled day of session before Congress enters recess, to have the General Appropriations Budget approved on Third and Final Reading.

All this may seem hectic work, and it really is. So, it is rather unthinkable for any other measure to be passed while budget hearing is ongoing. However, the Congressmen have other plans and intend to pass complicated measures that are among the legislative priorities of the Administration.

First, the bill increasing excise tax on alcoholic drinks, tobacco and vaping products was passed as early as 22 August. Second, on Monday, the 2nd tax measure was approved on Third and Final Reading, known as the Passive Income and Financial Intermediary Taxation Act (PIFITA) bill, which is also the Department of Finance’s (DoF) 4th Tax Package. Both bills will increase government revenue, fund the flagship #BuildBuildBuild program, aid in economic growth, and rationalize the complicated Philippines tax system, that would eventually lead to a safe and comfortable life for Filipinos. The swift passage of these tax measures may be credited to House Ways and Means Committee Chairman, Rep. Joey Salceda, a renowned economist, ready to bat out numbers and statistics in an instant.

Third — also on Monday, the bill amending the Foreign Investments Act, principally authored by Rep. Victor Yap, was likewise approved and will likely breeze through the Senate where a counterpart bill has already been filed by Senator Win Gatchalian. This bill will unburden foreign investors that intend to set up shop in the Philippines as it will lessen the required number of local hires in certain businesses, and allow the local practice of foreign professionals.

However, the most-anticipated among the pending measures filed this 18th Congress should be DoF’s 2nd Tax Package, known as the Corporate Income Tax and Incentive Rationalization Act (Citira), formerly coined as the TRABAHO bill in the 17th Congress. Citira was also read on 2nd Reading last Monday, signifying that it may be approved on Third and Final Reading very soon.

Rep. Salceda is convinced of the benefits that Citira will bring, despite the continuing objections from certain stakeholders, particularly those from the economic zones whose tax incentives will be revoked. But with the multitude of incentives available in the Philippine economy, it makes perfect sense to rationalize all these for purposes of simplifying the dizzying tax structure we currently had. Among the obvious benefits of Citira will be gradual reduction of the expensive Philippine corporate income tax from 30 percent to 20 percentfrom 2021 to 2029. Another landmark provision here is the recognition of transfer pricing by empowering the Commissioner to make significant adjustments to reflect the exact and accurate tax income of companies operating in the Philippines and in other jurisdictions.

At the rate the House leadership is going on the approval of the Administration’s tax measures, it seems that what was planned by the DoF to be passed during the entire 6-year term of President Rodrigo Duterte may be approved in the House within the agreed 15-month term of Speaker Cayetano. It may be wise for Secretary Carlos Dominguez, as well as the other Cabinet Secretaries, to make the most out of him, and strike while the iron is still blazing hot.

Email: darren.dejesus@gmail.com
or tweet: @darrendejesus.

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