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Philippines Senate Passes Tax Incentive Review Bill

by Mary Swire,, Hong Kong

09 June 2015

On June 8, the Philippines Senate passed the Tax Incentives Management and Transparency Act.

Juan Edgardo Angara, Chairman of the Senate Committee on Ways and Means, said the law is intended to solve the current lack of empirical data on fiscal incentives, thereby enabling the Government to "evaluate and maximize revenue spent towards boosting the country's economic growth."

Under the bill, which also requires the House of Representatives's approval, data on tax incentives will be maintained by the Department of Finance (DOF) in a single database to ease monitoring and analysis.

The DOF will then submit to the Department of Budget and Management (DBM) information on the value of tax incentives granted to registered business entities. It would also provide data on the total estimated, programmed, and projected claims for tax incentives in the preceding, current, and next fiscal year.

"Aside from monitoring tax incentives granted by investment promotion agencies (IPAs) and other government agencies, the database would help the government project tax incentives for future years and conduct an annual evaluation study on the impact of tax incentives to the nation's economic performance," Angara said.

The Bureau of Internal Revenue (BIR) Commissioner, Kim Jacinto-Henares, recently highlighted the 211 special laws that make up the nation's "wasteful" fiscal incentives framework. These laws have been granted at the request of a total of 14 IPAs. The estimated cost of these incentives in the Philippines in 2012 was PHP157bn (USD3.5bn), up from PHP144bn in 2011 – figures equal to over 10 percent of government revenue in both years.

The tax incentives provided to qualified investors include a variety of income tax holidays; a five percent tax on gross income earned; an exemption from taxes and duties on imported capital equipment, spare parts, materials, and supplies; a zero rate of value-added tax on sales of certain goods and services by local suppliers; and research and development incentives.

TAGS: tax | investment | business | tax incentives | law | Philippines | legislation | revenue statistics | business investment | Tax

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