DOF sees big push for remaining tax reform packages in 2020

The Department of Finance (DOF) will make a big push for the passage of the remaining packages of the Duterte administration’s comprehensive tax reform program in 2020, Secretary Carlos G. Dominguez III said.

“The task of bringing forth change is a long and painful one.,” Dominguez told DOF employees recently.

“We will have to deal with the vagaries of our politics, the inertia of the bureaucracy, and the resistance of those who would rather have things stay as they are,” Dominguez said.

“The reforms we seek to achieve will require resilience, endurance and persistence. I ask you to remain firm in the tasks we have to accomplish, especially next year as we push for the remaining packages of the tax reform program,” Dominguez added.

At least three more tax reform packages remain pending in Congress.

The DOF had already succeeded in passing the Tax Reform for Acceleration and Inclusion (Train) Act and the ongoing amnesty on delinquency and estate taxes.

It was also just awaiting President Rodrigo Duterte’s signature on a measure ratified by Congress containing package “2 plus” to further hike excise on “sin” products such as cigarettes and alcoholic drinks.

The second package, called Corporate Income Tax and Incentives Reform Act (Citira), sought to rationalize fiscal perks currently being enjoyed by investors while gradually reducing corporate income tax from 30 percent, the highest in the region, to 20 percent.

Time ran out on the Citira measure at the Senate which took a week-long break for the 2019 Southeast Asian Games.

The DOF had wanted to pass Citira before yearend, but some senators were concerned about business chambers’ warnings over potential job losses if existing locators scale down operations and new investors pull back.

Also pending Congress’ approval were tax reform packages concerning capital markets and land valuation.

Dominguez had said that the third reform package, dubbed as the Passive Income and Financial Intermediary Taxation Act (Pifita), will “level the playing field and develop our capital markets to attract more investors to take part in our infrastructure program.”

He said it would also “simplify the tax system in the financial sector to also help lower insurance costs, [and] encourage more Filipinos to avail themselves of financial protection from loss of life, property and damages incurred from natural disasters.”

Dominguez had said package four on land valuation reform will “help local governments collect the right taxes and clear the way for many right-of-way issues that languish in our courts, sometimes for decades, delaying for too long the efficiency and relief that good infrastructure brings to businesses and commuters.”

On a general tax amnesty—which was vetoed by Duterte in Republic Act (RA) No. 11213 or the Tax Amnesty Act of 2019–Dominguez was hopeful that it would include lifting of bank secrecy for tax purposes and automatic exchange of information.

Finance Undersecretary Karl Kendrick T. Chua had said the third and fourth packages were for passage within Dominguez’s 15-18 month time frame from the start of session of the 18th Congress in July.

If Congress could move faster, Chua had said it might as well pass measures aimed at increasing the motor vehicle users’ tax; higher mining taxes; and general tax amnesty with lifting of bank secrecy for tax-fraud cases and automatic exchange of information.

Edited by TSB