Single tax rate on capital income pushed
The government plans to impose unified rates on the motor vehicle user’s charge as well as the taxes levied on capital income and financial instruments under two separate tax reform packages.
The reform proposed by the Department of Finance in motor vehicle user’s charge, which formed part of the proposed tax package 1B, will slap a single base rate of P2.50 per kilo of gross vehicle weight (GVW) on all types of motor vehicles—whether for hire, private or government use, documents obtained by the Inquirer showed.
Vehicles with sidecars will be slapped P300; those without a sidecar, P240.
At present, the varying rates being applied for motor vehicle user’s charge depended on the types of vehicles as well as the GVW.
Under the DOF proposal, the collections from the motor vehicle user’s charge will accrue to the general fund for allocation into public road projects through the annual national budget.
An offshoot of the Tax Reform for Acceleration and Inclusion (TRAIN) Act, package 1B, besides higher motor vehicle user’s charge, also included a general tax amnesty, estate tax amnesty, bank secrecy relaxation and automatic exchange of information—tax administration measures removed by the Senate from the version of the first tax reform package passed by the Lower House last year.
Finance Secretary Carlos G. Dominguez III earlier said that the government was planning to implement the much-awaited tax amnesty by April next year to coincide with the deadline of filing income tax returns.
As for the capital income and financial intermediary tax reform proposed by the DOF under package four, a single rate of withholding taxes will be adopted.
Interests, dividends as well as capital gains will be levied with a unified rate of 15 percent.
Also, financial business taxes will be harmonized.
For preneed, pension and life insurance, a uniform 2-percent premium tax will be levied.
