Implementing bill needed if Phl amends tax law

CEBU, Philippines -  A Bureau of Internal Revenue official said the government must have an “implementing legislation” in case it imposes reforms on  tax policy to prepare for the Asean integration.

This was the reaction of Lawyer Neri Yu, the legal chief of BIR Cebu, to the World Bank’s advice that the Philippines must widen its narrow tax base and lower tax rates to make the tax system simpler.

“Anything that will modify or amend any provisions of our tax law either of the local (or national) government taxation, kinahanglan gyod na siya og enabling legislation to comply with the Asean integration,” Yu told The FREEMAN yesterday.

Tax base is a measure which the determination of tax liability is based; taxable income, for instance, is the tax base for income tax and assessed value for real property taxes

In its recent Philippine Economic Update, the Washington-based World Bank said the country has to continue improving public spending to benefit more poor Filipinos by getting additional tax revenues.

Given the different tax structures of Asean nations, Yu said the move to make structural reforms which are compliant to the integration must well be studied by the Congress.

The lawyer added there is a need to see first detrimental results – like the possibility to loss revenues – if the action to meet the terms of the economic integration is pursued.

Currently, the National Internal Revenue Code contains the ruling laws of  taxation in the country. 

Of all the types of taxation, the customs duties will be directly affected by the integration as the government has already imposed zero tariffs on goods coming from neighboring countries. Goods entering into the country are subject to customs duties.

With the integration, the process of taxing foreign and local goods has to be standardized in order for its  implementation to be effective, the legal chief noted.

Presently, the World Bank said the country’s tax system is characterized by a narrow tax base because of surplus incentives given to companies here and that it should broaden the base to increase tax revenues.

Yu, however, explained that giving of tax incentives are “not only looking after revenue collection” but seeing the need to invite investors into the country.

“We are also looking at another aspect of letting investors come to the country precisely for employment, hiring our local labor and also the exemption is not perpetual,” he further explained.

The Income Tax Holiday is only granted for five years and after investors are able to recover their return of investment, they need to be taxed already.

On the other side, the BIR Revenue Region 13 reported that it exceeded its revenue goal in the first half of this year.

BIR Cebu regional director Hermeno Palamine told The FREEMAN that national bureau’s Deputy Commissioner for Operations Nelson Ape recognized the regional office for performing well.

BIR No. 13 had collected P10.8 billion from five Cebu and Bohol revenue districts, exceeding its goal by 2.8 percent. The current collection is higher than the previous P8.7 billion in the same period last year.

Palamine, who is a lawyer, said the high growth numbers can be attributed to the positive response of taxpayers here to the agency’s campaign for paying correct taxes.

He noted they have been sending letters to doctors, accountants, lawyers, engineers and other professionals to remind them of their tax obligation to the government.

He added the BIR’s campaign is being done in a very friendly way. (FREEMAN)