Senate prodded on last 2 bills in tax reform package

MANILA, Philippines — The Department of Finance (DOF) has asked lawmakers to pass the remaining bills under the comprehensive tax reform program (CTRP) to complement the approval of measures to open up the economy.

Finance Secretary Carlos Dominguez yesterday asked legislators, particularly senators, to pass the last fiscal reforms including the real property valuation reform and the Passive Income and Financial Intermediary Taxation Act (PIFITA), to support recovery from the COVID-19 pandemic.

As the third package of the CTRP, the real property valuation reform authorizes the government to adopt valuation standards observed by the international community.

Likewise, the measure puts up a single base in taxing real estate through the use of benchmark rates to improve collection. It also requires the Bureau of Local Government Finance to come up with a uniform set of standards guiding appraisers and assessors in valuing real estate.

However, local governments maintain the power to set, adjust and regulate the tax rates. In turn, it is expected that by updating property valuation to meet international standards and retaining the fiscal authority within localities, revenues will increase due to the system enhancement.

Dominguez said that only 62 percent of revenue district offices have updated their zonal values in the past three years, while just two in every five local governments have reassessed their schedules of market values.

The House of Representatives approved their version of the reform in 2019, but the Senate has yet to pass its version of the measure.

Similarly, Dominguez urged senators to pass the PIFITA to simplify the fiscal structure for passive income, financial services and transactions, as the reform seeks to cut the number of tax rates for such instruments to 36, from 80.

PIFITA, as the fourth and final package of the CTRP, also harmonizes the tax rates on interest, dividends and capital gains to a standard 15 percent. Further, the package removes the documentary stamp tax slapped on non-monetary transactions.

Like the real property valuation reform, the House of Representatives has passed its version of PIFITA, but this has yet to be mirrored by the Senate.

“This set of reforms complements the other game-changing measures already in place to keep the economy back on the path of high growth,” the finance chief said.

For 2022, the government expects the economy, as measured by the gross domestic product, to expand by seven to nine percent on the assumption that industries will resume their operations and that the majority of Filipinos will be vaccinated.