The House committee on ways and means has formed a technical working group (TWG) to harmonize two bills seeking to modify the capital income taxes and financial intermediary taxes to complement the Tax Reform for Acceleration and Inclusion (TRAIN) law.
The creation of the TWG transpired Tuesday during a panel meeting presided over by House Speaker Gloria Macapagal-Arroyo and committee chair Nueva Ecija 1st District Rep. Estrellita Suansing. The meeting was attended by Department of Finance (DOF) officials and other stakeholders.
House Bill Nos. 8323 and 8252 – which cover the fourth package of the Duterte administration’s comprehensive tax reform program – seek to redesign the financial sector taxation.
Arroyo said the chamber would continue to pursue plans to fulfill President Rodrigo Duterte’s legislative agenda without dictating the timeline.
“Our agenda is to carry out the agenda of President Duterte so he has the 15 measures that he enumerated in the SONA (State of the Nation Address). We already passed 11 of them… We cannot dictate the timing of democratic processes. We just do our best,” she said in an interview.
House Bill Nos. 8323 and 8252 were separately authored by Camarines Sur 2nd District Rep. Luis Raymund Villafuerte Jr.; and Suansing and her husband, Sultan Kudarat 2nd District Rep. Horacio Suansing Jr.
Both bills seek to simplify the tax system, provide neutrality in tax treatment across financial institutions and instruments, as well as achieve the following:
– reduce the number of rates of withholding taxes;
– unify tax rates for interests, dividends, and capital gains;
– impose a single gross receipts tax rate for all financial institutions, except the premium tax on insurance;
– remove the distinction between lending and non-lending activities and impose a rate of 5 percent;
– impose pre-need, pension, life, and health maintenance organizations (HMO) insurances a 2 percent premium tax rate; and
– subject non-life insurance to a 5 percent premium tax rate
The proposed measures also aim to remove or minimize barriers to capital market development such as initial public offerings (IPO) tax and adopt a “regionally-competitive tax system.” /kga