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House panel OKs tax reform package

The House of Representatives’ committee on ways and means on Tuesday approved Package Four of the Duterte administration’s comprehensive tax reform program, which deals with capital income taxation.

READ: House panel okays tax reform part 2

House panel OKs tax reform package
TAX REFORM. House Majority Leader and Leyte Rep. Martin Romualdez (left) discusses with Deputy Majority Leader Llanda Bolilia (right) and Committee on Ways and Means Vice Chairman Sharon Garin (center) tax measures on Income and Financial Intermediary Tax Reform during the committee hearing. Ver Noveno 
The committee, chaired by Rep. Joey Salceda of Albay unanimously approved House Bill 304, or the “Passive Income and Financial Intermediary Taxation Act,” in just one hearing. The bill has been recommended for plenary action.

Salceda said the bill proposes to make capital income and financial intermediary taxes “simpler, fairer and more efficient.”

“This bill seeks to reform the taxation of capital income and financial services in the country, by redesigning the financial sector taxation into a simpler, fairer more efficient and a revenue-neutral tax system,” he said.

Salceda added that “the approval of this bill is earnestly sought so we can compete better in attracting capital and investment which is urgently needed to finance infrastructure, create more and better jobs and boost the inclusive and sustainable growth of the economy.”

The bill amends several sections of the National Internal Revenue Code of 1997, to exempt from documentary stamp taxes diplomas from educational institutions; oaths of office of 650,000 barangay and other officials; good moral standing certificate requirements of 4.1 million professionals for licenses issued by Professional Regulatory Commission and affidavits for notarized certificates.

Also to be exempted from DST are certificates of no marriage, baptismal certificates, and marriage licenses.

Rep. Mark Go of Baguio City proposed the said amendment, saying “government must let go of income from the DST for transactions that have little or no value on the documentary requirements of a person.”

HB 304 provides for the reduction in the number of withholding taxes and proposes a uniform tax treatment on interest income regardless of currency, maturity, issuer and other differentiating factors.

The bill also proposes that special rates and exemptions be removed.

It also proposes the unification of tax rates for interest dividends and capital gains while it harmonizes business taxes by imposing a single rate of 5 percent.

Income tax on interest, yield or any other monetary benefit earned or received from debt instruments, bank deposits, deposit substitutes and any other form of debt instrument and similar arrangements will be levied a uniform 15 percent tax.

A final tax of 15 percent shall be imposed cash or property dividends received by an individual from a domestic corporation or from joint stock company, insurance, mutual fund companies, collective investment schemes and regional operating headquarters of multinational companies.

The bill also proposes a final tax rate of 6/10 of 1 percent for presumptive capital gains from the sale, exchange, barter or disposition of shares of stocks traded in the stock exchange or an organized marketplace. The tax rate will be reduced gradually to 1/10 of 1 percent by 2024 or five years after its implementation.

Capital gains from sale, exchange, transfer, barter disposition of non-listed and non-traded debt instruments and other securities will have a final tax rate of 15 percents on the realized net capital gains.

For presumptive capital gains on listed and traded debt instruments and other securities not mentioned, a final tax at the rate of 1/10 or 1 percent will be imposed on the gross selling price of the debt instrument or securities.

Topics: House of Representatives , Rodrigo Duterte , comprehensive tax reform , Joey Salceda
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