DOJ backs bill promoting transparency in grant of tax perks to businesses

MANILA, Philippines — The Department of Justice (DOJ) favors the passage of the tax incentive bill that seeks to promote transparency and accountability in the grant and administration of tax perks to registered business entities.

“This Department manifests no constitutional or legal objection to the passage of the enrolled bill into law,” said Justice Undersecretary Emmanuel Caparas in a two-page letter to Deputy Executive Secretary for Legal Affairs Menardo Guevarra.

Malacañang had requested for the DOJ’s comments and recommendations on the Tax Incentives Management and Transparency Act after the Senate ratified the bicameral conference committee report on the proposed bill last month and transmitted for President Aquino’s signature.

A bicameral meeting had been conducted in October to reconcile the two versions of the bill, which has been identified as one of the priority economic reforms of the Aquino administration.

In its letter to Malacañang, Caparas said the passage of the bill was in line with Article 2, Section 9 of the Constitution.

The law provides that “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.”

Caparas also agreed that the passage of the enrolled bill will promote transparency and accountability in granting tax incentives for registered business entities administered by investment promotion agencies (IPAs).

“[It] will enable the government to monitor, review and analyze the economic impact of such incentives,” he added.

Under the bill, registered business entities must file with their IPAs a complete annual tax incentives report of their income tax holidays, value-added tax and duty exemptions, deductions, credits or exclusions from the tax base.

In turn, the IPAs will have to submit annual tax incentives report to the Bureau of Internal Revenue (BIR).

The Department of Finance is also required to maintain a single database of reports or information on the tax and duty incentives of registered business entities as reflected in their filed tax returns and import duties that the BIR and the Bureau of Customs will submit.

For purposes of monitoring and transparency, the DOF will submit to the Department of Budget and Management the aggregate data relating to tax incentives on a sectoral and per industry basis.  SFM