Congress intends to pass the conten-tious Tax Incentives Management and Transparency Act (Timta) before the end of President Aquino’s term with or without a consolidated position from the Department of Trade and Industry (DTI) and the Department of Finance (DOF), which continue to struggle on the measure’s salient points.
According to a BusinessMirror source, the heads of the DTI, the DOF and the Bureau of Internal Revenue (BIR) will be meeting on Monday for a final discussion with Timta House author, Rep. Ma.
Leonor Gerona-Robredo, on points of disagreement on the bill.
After the meeting, a last hearing on the bill will take place on Wednesday. And regardless of a consensus between the DTI and the DOF, the proposed legislation will move on to plenary debates in the House of Representatives, the source said.
“The last hearing on the bill in the House of Representatives will be on Wednesday. Rep. [Miro] Quimbo told us whether or not the DTI and DOF would agree, they will pass their own version. They’ll take a look at points of DTI and DOF that are still in conflict, and it’s up to them what will be included and not,” said the official, who asked for anonymity. Major points of disagreement between the two agencies continue to block the measure’s progress in Congress.
The DOF is refusing to loosen its grip on DTI’s incentive administration. It continues to insist that should the DTI submit to the BIR a tax-expenditure forecast report, or how much incentives investment-promotion agencies (IPAs) will grant in a given year, according to the source.
The requirement is being pushed by the BIR to get an estimate of what it deems are “revenue losses” in a year. The DTI has already agreed on submitting incentives information from a previous period, but refuses to predict the incentives to be given in the future.
The source said since the DOF has already agreed not to include a Tax Expenditure Account (TEA) in the budget bill—which will put a cap on the amount of incentives that IPAs can dispense—the requirement to predict prospectively serves no purpose.
Another point that raised a red flag is the demand of the DOF to make the trade chief legally accountable when submitting tax-incentive information to the BIR.
“When a list of companies is submitted to the BIR for reporting, it should be under oath; they want [Trade] Secretary [Gregory] L. Domingo to do that,” the source added.
The DOF is similarly insisting to get the power to forfeit the grant of incentives to an IPA-registered enterprise if it fails to electronically file its income-tax return.
“That can’t be absolute. When they shifted to e-filing of income-tax returns recently, they had problem with their computers; so it’s out of the hands of the company. There should be flexibility,” the source pointed out.
These are the problematic provisions, although an agreement has already been reached on the disaggregation of tax-incentive information on a per-sector level and in assigning the National Economic Development Authority (Neda) to be the main body to hold the information on incentives and make the incentives cost-benefit analysis.
Despite the remaining road blocks, it appears the passage of Timta in the 16th Congress will not encounter delays. The measure is already in the period of interpellation in the Senate, and the House of Representatives will be moving up to the same stage in a matter of weeks.
“There’s a strong sentiment that both chambers want to pass this in this Congress; so there’s a big chance,” the source said.
No progress, however, is being made on the rationalization of fiscal incentives bill (RFI), another tax-related legislation tagged as a priority economic bill by the chief executive. The said bill has failed to pass Congress for the past 16 years.
Economic Cha-cha
Meanwhile, AKO Bicol Party-list Rep. Rodel Batocabe, who co-sponsored the Resolution of Both Houses 1, or the economic Charter change (Cha-cha), said the lower chamber already completed the period of interpellation for the measure and is ready to approve it this week.
“We already finished the plenary debates for economic Cha-cha last Wednesday. We may approve the measure on second reading this week,” Batocabe said in a text message.
Speaker Feliciano Belmonte Jr., in an interview late last week, said once the interpellations are completed, the measure will likely be approved on second reading. “The moment they finish the interpellations, then it will probably be approved on second reading,” Belmonte said. The resolution, filed by Belmonte and Sen. Ralph Recto, aims to amend the so-called 60-40 rule that limits foreign ownership on certain activities in the Philippines.
The resolution will include the phrase “unless provided by law” in the foreign-ownership provisions of the Constitution, particularly on land ownership, public utilities, natural resources, media and advertising industries. Under Article XII of the Constitution, ratified during the term of then-President Corazon Aquino, foreign investors are prohibited from owning more than 40 percent of real properties and businesses. Foreigners are, likewise, prohibited from exploiting the country’s natural resources and from owning any company in the
media industry.
JFC on economic measures
Quimbo, chairman of the House Committee on Ways and Means, said the Joint Foreign Chambers (JFC) and Philippine business groups have reiterated their support for the passage of several economic measures.
“We discussed updates on a number of bills pending before the ways and means committee and the lower chamber, they expressed support to most of the measures particularly on the proposed Customs Modernization and Tariff Act, proposed amendments to Cabotage law, the proposed Timta, and the measure lowering income and corporate taxes,” said Quimbo, who met with the JFC and the Philippine business groups last Monday.
Catherine N. Pillas & Jovee Marie dela Cruz