Last chance for admin’s tax, financial reforms–solon (Sabong News)

THE House Committee on Ways and Means will focus on three key areas once session resumes on Monday: the effective implementation of the Corporate Recovery and Tax Incentives for Enterprises (Create) Act; a fiscally-sustainable framework for military pensions; and, a bevy of tax administration and enforcement measures, its chairman said. “We will continue to be busy until the last day of our term,” House Ways and Means Chairman Rep. Joey Sarte Salceda (Albay) said. “In fact, this final year is important, because it’s the last chance under [the] Duterte’s administration to smoothen out the implementation of already enacted reforms, and to pursue the remaining packages.” Salceda said the main priority “is ensuring Create is implemented well.” According to the lawmaker, the Department of Finance (DOF) committed to an implementing rules and regulations date of May 17. “I hope we get it by then, because [the] Create [law] is only really as good as implementation,” Salceda said. “We are trying to avoid new taxes, unless they are for sectors that won’t get hurt by taxes, like POGOs [Philippine Offshore Gaming Operators] or e- .” The lawmaker said their focus “now is really to secure the legacy of President Duterte’s tax reforms and to work on what we still can with the final year.” Salceda added that his House Bill 9271, or the Fiscal Framework for Military and Uniformed Personnel (MUP) Pension, has the support of the President’s economic team and of the House leadership. The MUP pension reform was a priority the President raised in his State of the Nation Address in 2019 and in 2020. “[The] MUP pension reform will be painful but crucial. It’s some pain now or very big pain in the future. The unfunded pension liabilities, according to the GSIS, amount to some P9.6 trillion based on 2019 data,” he said. “It’s a serious threat to our economic prospects in the long-term.” Salceda also said that his committee will defend in the plenary four crucial tax bills. These include fiscal regime for mining, the Value Added Tax (VAT) administration reform for the digital economy, the Ease of Paying Taxes Act and the general tax amnesty with automatic exchange of information (AEOI), subject to DOF revisions. “Everything is ready, except the language on general tax amnesty with [the] AEOI. We’re waiting on the DOF for that one,” Salceda said. Other tax administration and enforcement measures Salceda’s committee is working on include those against illicit tobacco trade, including of RR 9-2015 on exemptions from tax stamps for cigarettes meant for exports, stronger mechanisms to prevent leakages. Other measures include: one to counter sweetened beverage tax violations and another rationalizing import process for agricultural imports, preventing industry capture of import clearance processes and stronger enforcement against agricultural smuggling, Salceda said the measures also include one to improve internal revenue administration by accelerating e-invoicing, harmonizing transfer pricing regulations, and expediting the digitalization program of the Bureau of Internal Revenue and promoting voluntary compliance with easier taxpayer experience. Another measure is to improve fiscal sustainability of government exposures to Official Development Assistance and Public-Private Partnerships (by enacting remaining provisions of my 1998 Subsidy Council Act on government guarantees and other national government exposures). Included, too, are measures preventing the use of ecozones and customs bonded warehouses to curb smuggling. ON Sunday, Salceda said he expects a rebound in job creation beginning the second quarter of 2021 as the implementing rules and regulations (IRR) of the Create Act are issued this week. Salceda, who was the principal sponsor of the measure in the House, said DOF made a commitment to issue the IRR by May 17. “We will be able to fully market the country as an attractive investment destination with Create taking full effect. We should see strong numbers on FDI [foreign direct investment] pledges starting Q2 [second quarter],” the lawmaker said. He added that with the issuance of the Create IRR, the government will be able to “hunt for elephant-sized investments like Texas Instruments, the likes of which we have not had for a while.” In addition to the standard fiscal incentives menu under the reform, Create also provides that the President “may, in the interest of national economic development and upon the recommendation of the FIRB, modify the mix, period, or manner of availment of tax incentives, or craft the appropriate financial support package for a highly desirable project or a specific industrial activity based on defined development strategies for creating high-value jobs, building new industries to diversify economic activities, and attracting significant foreign and domestic capital or investment, and the fiscal requirements of the activity or project, subject to maximum incentive levels recommended by the FIRB.” The proposed IRR states that the government’s financial support can include land use, water appropriation, power provision, as well as budgetary support through the yearly national budget. THE President can also grant qualified firms a maximum of 40-years of fiscal incentives, with a maximum of eight-year income tax holiday (ITH). Qualified firms must have investment capital of a minimum P50 billion, or its equivalent in US dollars, or a minimum direct local employment generation of at least 10,000 jobs within three years from the issuance of the certificate of registration. “So, we can tailor-fit our incentives depending on the benefit of the investment to national development. We were unable to do this in the past. We can now compete for the best investment deals now,” Salceda said. “The old incentives regime was wasteful because it allowed nearly everyone, around 70 percent of the economy, to access tax incentives even if they do not need them,” he added. “Create gives incentives towards desirable economic goals such as countryside development, relocation away from NCR, research and development, and exceptionally-sized investments.”