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REVAMPING TAXES ON CAPITAL INCOME, FINANCIAL SERVICES

House panel OKs 4th package of tax reform program

/ 05:57 PM August 27, 2019

MANILA, Philippines — The House ways and means committee unanimously approved Tuesday the fourth package of the Duterte administration’s tax reform program that seeks to revamp taxes imposed on capital income and financial services.

House Bill No. 304 — or the Passive Income Financial Intermediation Tax Act (Pifita) — of committee chair and Albay 2nd District Rep. Joey Salceda seeks to reduce by half the 80 tax rates imposed on passive income, financial services, and transactions by amending portions of the National Internal Revenue Code of 1997.

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The previous 17th Congress already approved this measure on third and final reading last December 2018, while no counterpart bill has been filed in the Senate, according to the Department of Finance website.

In his explanatory notes of HB 304, Salceda said the proposed law reforms the financial sector taxation into a simple, fairer, more efficient, and a revenue-neutral tax system.

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The bill also proposes the following:

  • reduction in the number of rates of withholding taxes
  • unification of tax rates for interests, dividends, and capital gains
  • harmonization of business taxes; imposition of 2% premium rate on preneed, pension, life, and HMO insurance and 5% on nonlife insurance
  • removal of initial public offering tax
  • rationalization of documentary stamp tax (DST)
  • adoption of a regionally competitive tax system

Committee amendments to HB 304

Salceda said the committee also accepted Baguio Rep. Mark Go’s suggestion to exempt from DST nonmonetary documents like diplomas for 1.2 million college graduates per year and 6.5 million primary, junior, and senior high school (SHS) graduates; transcripts of records for some two million SHS graduate per year and other certifications of schools.

Also included in the tax exemption are the oath of office certification which covers 650,000 barangay officials and other elective officials, according to Salceda; good moral standing certificate required by the Professional Regulation Commission; affidavits and other certificates or notarized documents; proxies; certificate of no marriage record; baptismal certificate; and marriage license.

These, Salceda said, translates to about P450 million foregone revenues from the government.

/atm

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TAGS: House bill, Joey Salceda, package 4, passive income financial intermediation tax, tax reform
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