DOJ backs TIMTA bill

MANILA, Philippines - The Department of Justice (DOJ) supports the enactment of the proposed Tax Inventives Management and transparency act (TIMTA) which enhances transparency and accountability in the grant and administration of tax incentives to business entities and corporations.

In a two-page legal opinion released last Friday, the DOJ said it has no legal objection to the passage of TIMTA as proposed by Senate Bill  2669 and House Bill  5831 that were both approved by Congress earlier this year.

“The passage of the enrolled bill will promote transparency and accountability in granting tax incentives for registered business entities administered by investment promotion agencies (IPA) and will enable the government to monitor, review and analyze the economic impact of such incentives,” read the opinion signed by DOJ undersecretary Emmanuel Caparas.

The DOJ believes the country would reap the benefits from this measure that would be consistent with Article 2, Section 9 of the Constitution which provides “the State shall promote a just and dynamic social order that will ensure the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living and an improved quality of life for all.”

The proposed law requires all registered business entities to electronically file their annual tax returns and pay their tax liabilities with the Bureau of Internal Revenue (BIR) every year and to submit a complete annual tax incentives report of their income-based tax exemptions, value-added tax and duty exemptions, deductions, credits or exclusions from the tax to their respective IPAs.

The IPAs, in turn, will submit the annual report to the BIR.

In the same law, the Department of Finance is tasked to maintain a single database of reports submitted by the BIR and Bureau of Customs for monitoring and analysis of tax incentives granted. The DOF is also required to submit to the Department of Budget and Management the aggregate data also for monitoring purpose.

In approving the measure last June, senators said the bill intended to “make public and let the sun shine on the tax incentives which companies enjoy.”