In a statement yesterday, PBG-JFC said they support the proposed Tax Incentives Management and Transparency Act (TIMTA) or House Bill 2492 and Senate Bill 2669, though they asked the House and Senate committees on ways and means to amend the Declaration of Policy to reflect the State policy to “attract, promote and welcome productive investments” from foreign nationals.
They also asked for the removal of a requirement for the electronic filing of income tax returns “as this filing method may change from time to time depending on applicable or existing regulations of the Bureau of Internal Revenue (BIR).”
The House committee on ways and means approved on May 20 an updated version of TIMTA, which requires all businesses enjoying income-based tax incentives to electronically file their annual tax returns to the BIR. At present, only certain categories of taxpayer are required to do the e-filing, pursuant to the BIR’s regulation last March.
The groups also pushed for “lower penalties” for failure to submit application for incentive claims with the Board of Investments (BoI) and other Investment Promotion Agencies (IPAs) within six months. PBG-JFC wants a fine ranging from P1,000 to P50,000, “depending on the amount of incentives availed,” instead of forfeiture of incentives.
“Forfeiture of incentives for merely failing to timely file an application for incentive claim is unduly harsh and disproportionate to the minor infraction, and hence, confiscatory,” the statement read.
The groups also want the removal of a provision that extends by 18 months the prescriptive period within which the BIR may make an assessment.
“Aside from diminishing the substantive rights of taxpayers afforded under the 1997 NIRC (National Internal Revenue Code), the additional 18-month period is unconstitutional as it violates the equal protection clause.”
PBG-JFC asked the lawmakers to clarify the scope of information to be published about the monitoring of tax incentives, as well as the role of the BIR vis-a-vis BoI and IPAs. They also pushed for the inclusion of taxes directly paid by the IPA-registered enterprises or taxes remitted by them on behalf of other taxpayers, including withholding tax on compensation and fringe benefits tax, in the data analysis.
The TIMTA requires the Finance department to maintain a tax incentives database handed out by the investment promotion agencies, and the National Economic and Development Authority to do a cost-benefit analysis on the impact of these incentives to the Philippine economy.
PBG-JFC is composed of 14 local and foreign business groups, composed of almost 35,000 companies.
The letters’ signatory organizations encompass the American Chamber of Commerce of the Philippines, Australian-New Zealand Chamber of Commerce of the Philippines, Canadian Chamber of Commerce of the Philippines, European Chamber of Commerce of the Philippines, IT and Business Process Association of the Philippines, Japanese Chamber of Commerce and Industry of the Philippines, Korean Chamber of Commerce of the Philippines, Management Association of the Philippines, Philippine Association of Multinational Companies Regional Headquarters, Philippine Chamber of Commerce and Industry, Philippine Exporters Confederation, Semiconductor and Electronics Industries in the Philippines Foundation, and Tax Management Association of the Philippines.
TIMTA currently needs to hurdle the House plenary for successive readings and then be reconciled with the Senate version.