TWO MORE tax reforms and a measure that will further open up the economy can be expected to bag final approval in the House of Representatives this week, leaders of the chamber said in separate interviews last weekend.
MORE TAX REFORMS ON THE WAY
“PIFITA (Passive Income and Financial Intermediary Taxation Act) tomorrow third reading; CITIRA (Corporate Income Tax and Incentives Rationalization Act) second reading tomorrow, third reading Thursday; FIA (Foreign investments Act amendment) third reading Tuesday,” Albay 2nd District Rep. Jose Ma. Clemente S. Salceda, House ways and means committee chairman, said in a mobile phone message on Sunday.
AAMBIS-OWA Rep. Sharon S. Garin, committee vice-chairman, said in a separate text: “PIFITA and Foreign Investments Act [amendment was] approved on second reading last week, so third-reading (approval) possible this coming week.”
“PSA [Public Services Act amendment that will open up the telecommunication and transport sectors to foreign participation] still for floor deliberations and CITIRA on period of amendments,” Ms. Garin, who also chairs the committee on economic affairs, said on Sunday.
The chamber last week approved on second reading House Bill No. 304, or the proposed PIFITA, which among others imposes a unitary 15% rate on interest income from regular savings and short term deposits, foreign currency deposits and long-term deposits; as well as dividend income from the current zero to 30%.
The bill, which forms part of the fourth package of the administration’s comprehensive tax reform program (CTRP), will also gradually reduce stock transaction tax rate on listed stocks to 0.1% from the current 0.6% and will remove the tax on the initial public offering of shares of stock.
CITIRA — the second tax reform package that now awaits second-reading approval in the House — proposes to reduce corporate income tax rate to 20% by 2029 from 30% currently.
The measure will also rationalize the current fiscal incentive system by making perks more time-bound and dependent on economic benefits brought by availing businesses, as well as removing those deemed redundant.
These tax reforms were among the measures President Rodrigo R. Duterte mentioned in his fourth State of the Nation Address on July 22, along with the proposal to increase excise tax on alcohol and vapor products and to centralize the framework for real property valuation and assessment.
The proposed “sin” tax increase, under HB No. 1026, has already bagged final approval at the House of Representatives and is currently pending at the Senate ways and means committee, chaired by Senator Pia S. Cayetano. The Senate panel on Wednesday will resume discussions on Senate Bill No. 987 and HB 1026. The committee targets approval of the committee report “within September,” Ms. Cayetano told reporters on Aug. 29.
The government has so far enacted Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion Law, which slashed personal income tax and increased or added levies on several goods and services; RA 11213, the Tax Amnesty Act, which grants estate tax amnesty and amnesty on delinquent accounts left unpaid even after being given final assessment; and RA 11346, which will gradually increase excise tax on tobacco products to P60 per pack by 2023 from the current P35.
OPENING UP THE ECONOMY
Meanwhile, the House is also expected to approve on third and final reading this week a measure that will amend Republic Act No. 7042, or the “Foreign Investments Act (FIA) of 1991,” by lifting restrictions on foreigners from practicing their professions in the Philippines, in order to hasten transfer of knowledge and technologies to locals.
Under HB 300, Tarlac 2nd District Rep. Victor A. Yap proposed to exclude the “practice of professions” from the Foreign Investment Negative List, which identifies economic areas reserved for Filipinos.
The bill also reduces to 15 from 50 currently the minimum number of direct local hires required of foreign investors looking to establish small- and medium-sized enterprises with minimum paid-in capital of $100,000.
Its counterpart measure, SBs 418 and 919, respectively authored by Senators Francis N. Pangilinan and Sherwin T. Gatchalian, await approval at the chamber’s committee on economic affairs.
The said measure is among the legislative measures the Cabinet economic cluster asked the 18th Congress to prioritize within the latter’s first regular session, which will end on June 5 next year.
It is also among the legislative priorities which 14 local and foreign business groups pitched to the Office of the President and Congress in July. — Charmaine A. Tadalan with Vince Angelo C. Ferreras