The Department of Justice has expressed no objection to the passage by Congress of the proposed Tax Incentives Management and Transparency Act, which enhances transparency and accountability in the grant and administration of tax incentives to business entities and corporations.
In a legal opinion released Friday, the DoJ gave its approval to the enactment of Timta under Senate Bill No. 2669 and House Bill No. 5831 that were both approved by Congress earlier this year.
“The passage of the enrolled bill will promote transparency and accountability in granting tax incentives for registered business entities administered by Investment Promotion Agencies and will enable the government to monitor, review and analyze the economic impact of such incentives,” the Justice department said, in an opinion signed by DoJ Undersecretary Emmanuel Caparas.
The DoJ said the country would reap the benefits from this measure that will be consistent with Article 2, Section 9 of the Constitution which provides that “the State shall promote a just ang dynamic social order that will ensure the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living and an improved quality of life for all.”
The proposed law requires all registered business entities to electronically file their annual tax returns and pay their tax liabilities with the Bureau of Internal Revenue every year and to submit a complete annual tax incentives report of their income-based tax exemptions, value-added tax and duty exemptions, deductions, credits or exclusions from the tax to their respective IPAs.
The IPAs, in turn, will submit the annual report to the BIR.
In the same law, the Department of Finance is tasked to maintain a single database of reports submitted by the BIR and Bureau of Customs for monitoring and analysis of tax incentives. The DoF is also required to submit to the Department of Budget and Management the aggregate data also for monitoring purpose.
In approving the measure last June, senators said the bill intended to “make public and let the sun shine on the tax incentives which companies enjoy.”
The lawmakers stressed that the database would help the government project tax incentives for future years and to conduct an annual evaluation on the impact of tax incentives on the nation’s economic performance.