Senator Sonny Angara lauded on Thursday the recent enactment of the Tax Incentives Management and Transparency Act (TIMTA) that aims to promote transparency and accountability in the grant and administration of tax incentives to registered business entities.
“The law focuses on promoting transparency and accountability which will in turn encourage investors to bring more businesses to our country, provide more employment opportunities, and boost our economic growth,” Angara, sponsor of the law and chairman of the Senate ways and means committee, said in a statement.
“I thank our colleagues in the Senate and House of Representatives, our counterpart Cong. Miro Quimbo and Cong. Leni Robredo for supporting the passage and helping reconcile the conflicting provisions, and President Aquino for signing this bill which is one of his priority economic reforms given his administration’s good governance thrust.”
“We are now working for the passage of the administration’s another priority bill, the Customs Modernization and Tariff Act. We are hoping that this would be reciprocated with the consideration of our income tax reform bill,” he added.
READ: Aquino signs Tax Incentives Management and Transparency Act into law
Under the new law, the senator said, registered business entities must file with their investment promotion agencies a complete annual tax incentives report, which will be then submitted to the Bureau of Internal Revenue, the Bureau of Customs, and the Department of Finance (DOF).
For monitoring and analysis of tax incentives granted, Angara said the law mandates the DOF to maintain a single database and submit to the Department of Budget and Management (DBM) the actual amount, estimate claims, current year’s programmed amount, and the following year’s projected amount of tax incentives.
“For transparency purposes, these data and information will be reflected by the DBM in the annual Budget of Expenditures and Sources of Financing, which shall be known as the Tax Incentives Information section,” he explained.
The law also mandates the National Economic and Development Authority (NEDA) to conduct “cost benefit analysis on the investment incentives to determine the impact of tax incentives on the economy.”
“TIMTA provides a solution for the lack of empirical data on fiscal incentives and what it reciprocates to the economy. With NEDA’s cost-benefit analysis, it will allow the government and policymakers to make better decisions in overseeing the implementation of existing investment-related laws, and in managing the nation’s finances,” Angara said.
He said the law would not tamper with the fiscal incentives presently enjoyed by the private sector given a provision under the bill which explicitly states, “nothing in this Act shall be construed to diminish or limit, in whatever manner, the amount of incentives that IPAs may grant.”
Any registered business entity which fails to comply with filing and reportorial requirements will be penalized, under the law, with a fine amounting to P100,000 for its first violation; P500,000 for the second violation; and, cancellation of the registration of the business entity for the third violation.
“Fiscal incentives cannot be evaluated in a vacuum because of the many benefits such as jobs and rural development that come along with these incentives. We need to better monitor the incentives we give to ensure that they actually lead to more investments, high-income jobs, and inclusive growth for our countrymen,” Angara added. CDG