P-Noy signs tax incentives management law

MANILA, Philippines - President Aquino has signed into law Republic Act 10708 or the Tax Incentives Management and Transparency Act (TIMTA) that promotes stricter monitoring and management of tax incentives granted to businesses.

Aquino himself announced this during the Integrity Summit 2015 in Makati City Wednesday.

The law aims to establish “a more strategic and deliberate system” through which government can offer tax incentives and focus on critical growth areas of the economy as well as optimize their social benefits.

“Of course, we have also seen other pieces of legislation that improve our economic landscape. There is of course the Competition Law, which fulfills the twin goals of improving the goods and services available to our people, and incentivizing innovation among companies here,” Aquino said.

 The President said these laws passed by Congress, among several others, would “certainly help foster an environment conducive to growth long after I step down from office.”

To monitor tax incentives, the Bureau of Internal Revenue  and the Bureau of Customs shall submit to the Department of Finance tax and duty incentives of registered business entities as reflected in their filed tax returns and import entries, and actual tax and duty incentives as evaluated and determined by the BIR and the BOC.

The DOF shall maintain a single database for monitoring and analysis of tax incentives granted and submit to the Department of Budget and Management the aggregate data on a sectoral and per industry basis of the  amount of tax incentives availed by registered business entities, the estimate claims of tax incentives immediately preceding the current year, the programmed tax incentives for the current year, and the projected tax incentives for the following year.

 The information will be given to the Joint Congressional Oversight Committee created under this Act.

The data shall also be reflected in the annual Budget of Expenditures and Sources Financing (BESF), which shall be known as the Tax Incentives Information section.

 “Nothing in this Act shall be construed to diminish or limit, in whatever manner, the amount of incentives that IPAs (investment promotion agencies) may grant pursuant to their charters and existing laws, to prevent, deter, or delay the promotion and regulation of investments, processing of applications for registrations, and evaluation of entitlement of incentives by IPAs,” the law said.

Under the law, the National Economic Development Authority is mandated to conduct cost-benefit analysis on the investment incentives to determine the impact of tax incentives on the Philippine economy.

All heads of the IPAs are required to submit to the NEDA the aggregate tax incentives, based on the submissions of registered business entities as provided in Sec. 4 of the law and aggregate investment-related data, both on a sectoral or per industry basis, which may include but not limited to, investment projects and cost, actual employment and export earnings.

 Any registered business entity that fails to comply with filing and reportorial requirements with the appropriate IPAs and/or show proof of filing of tax returns using the electronic system shall be meted a P100,000 fine for the first violation, P500,000 for the second violation and cancellation of business registration on third offense.

 If the failure to show proof is not due to the fault of the registered business entity, it shall not be a ground for the suspension of income tax holidays and or other income-based tax incentives availment, the law said.