Trade Secretary Gregory L. Domingo wants the trade and finance departments to come to terms over their respective positions on the proposed Tax Incentives Management and Transparency Act (Timta).
Domingo is making a push for the Senate version of the bill, which does away with the appropriation of the incentives granted to enterprises by the country’s investment promotion agencies. But the Trade official’s stand runs counter to that of the Department of Finance (DOF), which is pushing for the passage of a House bill under which tax incentives for investors will be sourced from annual state appropriations.
“The Department of Trade and Industry and the DOF will need to agree. We will be meeting with the DOF, and we’re hoping that we can move closer to the Senate version,” Domingo further said.
What was agreed on by the DTI and DOF, as far as the Timta was concerned, was on the reporting and disclosure of incentives on an aggregate basis.
“There are no other sticking points. We are indifferent as to how the DOF wants to treat incentives, whether or not as an expense. The DOF wants to disclose how much incentives have been availed of as they want to be transparent as well. Disclosing that is not a big deal for us for as long as it will be on an aggregate basis. The public has the right to know. I don’t have a problem with disclosure and transparency,” Domingo explained.
A key difference between Senate Bill No. 2669 and House Bill 2942 is the proposed appropriation of incentives.
The Senate version provides that incentives will not be appropriated or budgeted. This means that the granting of incentives won’t need Congressional approval. The tax incentives may be monitored through the Tax Incentives Information section in the annual Budget of Expenditures and Sources of Financing, which will only serve as an addendum to the national budget.
In contrast, the proposed House Bill 2942, or Timta, has a provision that called for the creation of a tax expenditure account, from which the tax incentives being granted by investment promotion agencies are to be accounted.
In an earlier position paper, the DTI pointed out that subjecting incentives to annual appropriations could lead to legal challenges and create instability and unpredictability in the investment environment. Amy R. Remo