THE SENATE Ways and Means Committee chairman said he plans on wrapping up consultations on a bill seeking to simplify tax rates for passive income and financial intermediaries by May.
“Our target to sponsor the PIFITA (Passive Income and Financial Intermediary Taxation Act) bill will be around May, and we will target to finish that within the year,” Senator Sherwin T. Gatchalian told a forum at the Senate on Thursday.
“It’s a very complex and comprehensive bill. It has many facets. But its objective, number one, is to harmonize all the passive income rates.”
Earlier in the day, the committee and officials from the Bureau of Internal Revenue and the Department of Finance convened in a closed-door technical working group to refine the measure.
Mr. Gatchalian said the body is consulting industry players on whether the government should do away with documentary stamp tax on all financial transactions, noting that most of the country’s Southeast Asian peers do not charge entities for these stamps.
“In some regions, in some countries in the region, they don’t charge documentary stamps on financial transactions. We charge documentary stamp tax on all of our financial transactions,” he said.
He also said he was not in favor of introducing new taxes this year, saying it would be better for Congress to harmonize and update current tax rates.
Finance Secretary Ralph G. Recto has said the government does not plan on imposing new taxes this year and would only push “only what is on the table.”
In February, Finance Assistant Secretary Karlo Fermin S. Adriano told a committee hearing that it had revised its proposal to keep tax rates on interest income at 20% instead of the gradual reduction to 15% previously.
Keeping the rate at 20% instead of the gradual decrease by 2028 would generate about P30.8 billion in revenues, he said.
The adjusted tax reform proposal will drop the previously projected P83 billion in foregone revenue from changes to taxes on passive income, financial intermediaries, financial transactions and excise tax on pick-up trucks to P12.2 billion in revenue, the Finance official said.
“Harmonization, financial inclusion and at the same time competitiveness,” Mr. Gatchalian said, listing what the bill aims to achieve. — John Victor D. Ordoñez