MANILA, Philippines — The House of Representatives gave final approval on Monday (Sept. 9) to the fourth package of the Duterte administration’s tax reform program that seeks to simplify taxes on capital income and financial services.
House Bill No. 304 or the Passive Income and Financial Intermediary Taxation Act (Pifita) was approved on third reading 186 to 6 with two abstentions.
The House, under the 17th Congress, already approved this measure on final reading in December 2018, but no counterpart bill has been filed at the Senate until now, according to the Department of Finance.
The tax measure was swiftly approved as it was introduced to the plenary on Sept. 3 and approved on second reading the day after.
Ways and means committee chair and Albay Rep. Joey Salceda said the bill would revamp the taxation scheme in the financial sector into a simple, fairer, more efficient and regionally competitive tax system.
The proposed law amends portions of the National Internal Revenue Code of 1997 and seeks to reduce from 80 to 36 the tax rates imposed on passive income, financial services and transactions.
Pifita also seeks to cut tax rates on interest income from regular savings and short term deposits from the current 20 percent to 15 percent. Under the bill, tax rates on interest income from foreign currency deposits and long-term deposits will both dip to 15 percent while dividend income will be fixed at 15 percent except for inter-corporate bonds.
The bill also seeks to make insurance products more affordable by lowering the tax on such and rationalizing documentary stamp tax (DST). Salceda said the measure would unify all non-life insurance DST rates and lower them gradually from 12.5 to 7.5 percent.
The lawmaker, an economist, also said the bill would remove the DST on domestic money transfer fees to “reduce the cost of money transfers, especially for those working in urban areas and sending money to family in the province.”
Gabriela Rep. Arlene Brosas opposed the approval of the bill which she said: “grossly favors the rich who make fortunes out of thin air in the financial sector.”
“Such tax rate reduction is again offset by the tax collections sourced from ordinary Filipinos via TRAIN 1, which is projected to reach P153 billion next year,” Brosas added./TSB
Read the latest version of the bill here:
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