The Senate committee on ways and means has expunged the provision that pushed for budgetary allotments for tax incentives as contained in the Tax Incentives Management and Transparency Act (TIMTA).
In a plenary session held on Tuesday, committee chairperson Senator Juan Edgardo M. Angara presented the committee report which consolidated two existing Senate bills that aims to create a monitoring system for tax incentives given by investment promotion agencies (IPAs) and other government agencies (OGAs).
Committee Report No. 104 merged Senate Bills No. 469 and 1187, authored by Senators Franklin M. Drilon and Ralph G. Recto, respectively, into Senate Bill No. 2669 which provides for the monitoring of tax incentives through a Tax Incentives Information (TII) section in the yearly Budget of Expenditures and Sources of Financing (BESF) report.
“The only requirement is for IPAs and OGAs to submit an annual report, in the form of a TII report, which shall reflect the tax incentives claimed by registered business entities and qualified private individuals or corporations, as reflected in their tax returns,” Mr. Angara said during his sponsorship speech.
Previously, the Department of Trade and Industry (DTI) opposed the move to make tax breaks part of the national budget citing that it will effectively put a limit to the incentives that can be given out.
If approved, the proposed measure may also cripple the Philippines’ incentive arrangements and may result in breaches of contract.
Instead, the senator highlighted the need for a better monitoring scheme citing the two conflicting reports from the Department of Finance (DoF) and the Board of Investments (BoI), an attached agency of the DTI.
According to Mr. Angara, a BoI study claimed that income tax holidays yields significant economic gains while a DoF report said that tax expenditures arising from tax incentives takes up a huge portion of government spending, accounting to about 9.3%, or P144 billion, in 2011 alone.
Asked for comments, Henry J. Schumacher, executive director of the European Chamber of Commerce of the Philippines (ECCP) said that the chamber will take a second look on the bill during the monthly meeting of the Joint Foreign Chambers of the Philippines (JFC).
The proposed law, tagged as a priority measure by Congress and Malacañang has been scheduled to be deliberated by lawmakers in the upper chamber starting Wednesday.
At the House of Representatives, a similar bill -- House Bill No. 2492 -- which still contains the provision on including incentives in the national budget is still pending at its ways and means committee.
On Tuesday, the proposed measure at the House has referred to a technical working group (TWG) after the committee’s fourth deliberation was finished on Tuesday.
Marikina Rep. Romero S. Quimbo, who chairs the committee, said that the version of the bill -- a product of three committee hearings -- is “substantially similar to that of the Senate version.” The TWG, according to Mr. Quimbo, is set to meet on Wednesday next week.
The original bill mandated the creation of a Tax Expenditure Account (TEA) as an automatic appropriation in the General Appropriations Act (GAA) that will account for tax incentives that will be given by investment promotion agencies (IPAs) to businesses such as the Board of Investments and the administrators of economic zones.
House Bill 2492 mandates the DoF, Bureau of Internal Revenue and the Bureau of Customs to create a single database for all tax incentives that were granted. -- Alden M. Monzon and Elizabeth E. Escaño
Source: Business World Online
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