Senate passes tax bill to give growth a boost

MANILA – Moving to strengthen the country’s investmentelated laws, the Senate on Monday passed a measure geared towards promoting greater transparency and accountability in the grant and administration of tax incentives to business entities, individuals and corporations.

Senator Juan Edgardo “Sonny” Angara, chairman of the Senate Committee on Ways and Means and sponsor of Senate Bill No. 2669, known as the Tax Incentives Management and Transparency Act (Timta).

Voting 14-0, the senators approved Senate Bill No. 2669, known as the Tax Incentives Management and Transparency Act (Timta). The proposed bill, Angara said, seeks to provide a solution for the lack of empirical data on fiscal incentives, thus enabling the government to “evaluate and maximize revenue spent towards boosting the country’s economic growth.”

Senate Bill No. 2669 was a consolidation of bills authored by the measure’s co-sponsors, Senate President Franklin Drilon and Senate Pro Tempore Ralph Recto.

According to Drilon, the main purpose of the bill is to “make public and let the sun shine on the tax incentives which companies enjoy.”

“There should be transparency on the taxes that we are not collecting and waiving in the form of incentives granted to the private sector, so that we will see whether indeed, the public is best served by these incentives being granted to them,” he said.

Drilon said the Timta was one of the two key economic reform bills – along with the Fair Competition Act – that both houses of Congress had agreed to pass and submit for signing to President Benigno Aquino III before they go on sine die adjournment on June 11.

Under the bill, the data and information related to the tax incentives claims of the registered business entities and the actual amount of tax and duty incentives granted which are submitted by the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) to the Department of Finance (DOF) shall be maintained by the DOF under a single database for monitoring and analysis of tax incentives granted.

This would empower the Neda to collect and evaluate tax incentives data generated from the reports of the DOF, BIR, and BOC, along with investmentelated data such as lists of registered business entities, investment projects, investment cost, actual employment and export earnings.

Angara explained that the Neda’s cost-benefit analysis would “allow policymakers to make better decision in crafting or revising laws, overseeing the implementation of existing investmentelated laws, and managing the nation’s finances.” No diminishing of tax incentives granted.

Recto, for his part, allayed fears that the bill would tamper with the fiscal incentives presently enjoyed by the private sector, and stressed that the Timta should instead focus on promoting transparency and accountability.

“This bill will not appropriate tax incentives availed; it merely requires that they be accounted for. It does not rescind nor recall any investment perk; it just obliges companies and the government to record and report the same,” Recto said.

Under the bill, “nothing in this Act shall be construed to diminish or limit, in whatever manner, the amount of incentives that IPAs may grant, pursuant to their charters and existing laws.” Angara said that instead of diminishing the powers of IPAs to grant incentives, the Timta was pushed “to strengthen the belief and confidence of investors and businesses in the government’s ability to set a clearer and more efficient supervision of fiscal incentives.”

“This way, we will convince them to invest more and bring more businesses to our country, thus providing more opportunities and jobs for our countrymen,” he concluded (PNA)