DOF pushes remaining tax reform packages

The Department of Finance (DOF) remains optimistic that Congress will pass this year the remaining tax reform packages that aim to reform the property valuation system and simplify capital market taxation, according to a report by Manila Bulletin.

After the legislature was able to act on a slew of economic liberalization bills in 2021, Finance Secretary Carlos G. Dominguez III renewed his call to Congress to approve the pending bills under the Comprehensive Tax Reform Program (CTRP).

The approval on third reading of the DOF-supported amendment proposals to the Public Service Act (PSA), Foreign Investments Act (FIA) and the Retail Trade Liberalization Act (RTLA) bode well for the approval of the remaining tax reform packages, Dominguez said.

Real property valuation reform, or Package 3 of President Duterte’s CTRP, was already passed by the House of Representatives back in November 2019, but remains pending at the committee level in the Senate as of December 2021.

Package 3 aims to develop an equitable and efficient real property valuation system while broadening the tax base used for property-related taxes of the national and local governments.

Reforming the property valuation system to make it on par with global standards and shielding it from political influence will help local government units (LGUs) raise more revenues without increasing the existing tax rates or imposing new taxes, the DOF said.

The Passive Income and Financial Intermediary Taxation Act (PIFITA), meanwhile, complements the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Act by making passive income and financial intermediary taxes simpler, fairer, more efficient, and more regionally competitive.

This last package under the CTRP will reduce the number of differing tax rates from 80 to 36 and harmonize the tax rates on interest, dividends and capital gains, and the business taxes imposed on financial intermediaries.

PIFITA, which is CTRP’s Package 4, will likewise remove the documentary stamp tax (DST) imposed on non-monetary transactions, the DOF said.

With Package 4 reform, the Philippines can be more competitive in attracting capital and investments that are urgently needed to finance large-scale infrastructure, including the “Build, Build, Build” program, create more and better jobs, and boost economic growth, the DOF added.

Congress has also approved its version of this reform package, which remains pending at the committee level of the Senate.