Government acts to make idle assets more attractiv

Finance Secretary Jose Camacho said yesterday the government will propose amending tax laws to help bring down the disposal cost of foreclosed assets held by commercial banks.

"We would like to propose a law to help asset management companies (AMCs) bring down the cost of restructuring. We would like the Congress to take a look at the six-percent capital gains tax and see how we can help banks dispose of their bad assets," Camacho told a Senate budget hearing.

The National Internal Revenue Code requires those selling real estate assets to pay a six-percent capital gains tax.

Camacho explained the capital gains tax was shouldered by the seller every time a piece of property was transferred.

This meant the banks would have to pay the capital gains tax before it could sell the non-performing assets to the AMCs. The AMCs would also pay the six percent tax before it could sell the real estate assets to another company.

Bangko Sentral ng Pilipinas (BSP) Governor Rafael Buenaventura said the bank was trying to encourage commercial banks to set up their own AMCs to which they can transfer their non-performing loans as well as bad assets in order to clean up their balance sheets. Buenaventura also urged the same budget hearing to lift the documentary stamp tax on secondary market transactions, in particular, the tax on mortgages paid by banks for the foreclosed real estate assets they hold.