TUESDAY SEPTEMBER 10,

2019

House OKs Du30's 4th

tax reform package
By Maricel V. Cruz across investors and savers; d) minimize
arbitrage opportunities; aod e) promote
capital market development and tax
HE House of Representatives passed on competitiveness within the context
Monday night the fourth package of the Duterte of financial globalization, increased
mobility, and financial inclusion.
administration's Comprehensive Tax Reform According to Department of Finance
Program known as Passive Income and Financial Undersecretary Karl Kendrick Chua, the
PIFITA would make the country more
Intermediary Taxation Act by a 186-6-2 vote. competitive within the Southeast Asian
reglon.
Also on Monday, House approved and Inclusion (TRAN; .*4"1" Ot He added the changes would be
_
the proposed bill allowing foreign makrng . passlve
rncome ald financial revenue neutal in the short terr! as some
professionals to get employedl intermediary taxes simpler, fairer, tar rates will be lowered while othen are
Voting 20 t-6-7. the House approved more efficient, and more
regionally raised.
the bill allowing the exclusion of.the compefitrve.
'lractice of profession,' fiom 'the "This is the priority mentioned by the
Albay Rep. Joey Salceda, the main President in the SONA and also a pribrity
Foreign lnvesbnent Negative Lisl proponent of the bill and chairman of Finance
Secretary Dominguez because
allowing more foreign profissionals can of the l.louse committee
on ways and we need to address the issues in the Tax
be employed in the counw. means, cited numerous deficiencies as Code," Chua said.
The House in plenary seision presided compelling reasons to undertake Ax Among the proposals of the pIFITA
by Deputy Speaker Neprali Gonzales lll reform in the financial Sector. is the decrease of tax rates on interest
approved amendments to the Foreign These deficiencies include income from regular savings and short-
Investrnents Act or Republic Act 7042 complicated tax strucfire, susceptibility term deposits from the current 20 Dercent
that sets regulations of imported labor to arbitrage, and inequitable disdibutioil to 15 percent-Is percent being the
among otbers in companies granted oftax burden. lowest tax on labor income and wittrin
ucanhves by the govemment. "The inclusion of the capital income the range relative to other states in the
The bill excludes &e ,.practice of and financial services in-tle current region. .

pmfessions' fiom FINI, coverage to anract
torelgn protbssionals to tte counw.
Tfe bill also lowers to l5 the minimum
number of direct local hires required of
foreign inveslors. from 50.
The House passed the tax measure
contained in House Bill 30?, with
the bill's auLhon saying the measure
complemenied Republic Act 10963
or the "Tax Reform for Accelemtion
administmtion's Comprehensive Tax
Reform Program provides a window of
opportmity io achieve the rruch-leeded
reform in the financial sector," Salceda
said in his explanatory note ofthe bill.
The, PTFITA particularty aims to; a)
provide neutrality in the tax treatnent
across financial institutiqu and financial
instruments; b) simplif,/ {hat has become
a complex t4x system; cfrmprove equity
u F4g2'-4u z
Tax mtes on interest income from foreign
currency deposits and long-term deposir
shall botb likewise dip o lS percent.
Dividend income shal be fixed at 15
percent orcept for inter-co4)orate bonds.
Tax rates on proceeds from the sale
of listed shares shall be lowered by 0.1
Pgrcentagg point each year beginning
2020 until 2025- from the current 0.6
percent to 0., percent.