EXPECTED NEW TAX MEASURES FOR 2019
By: Euney Marie J. Mata-Perez on January 3,2019.
Happy new year!
The year 2018 was an interesting year in the tax arena. Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (Train) Law, amending the National Internal Revenue Code (Tax Code), became effective on January 1, 2018. We then saw the passage of several regulations implementing the law. However, we also expect several tax measures to be passed this year.
House Bill (HB) No. 8083 or the Tax Reform for Attracting Better and Higher Quality Opportunities Bill, the Trabaho Bill for short, was approved on third reading by the House of Representatives on September 10, 2018. The Trabaho Bill is the second package of the government’s comprehensive tax reform program which proposes to gradually lower the corporate income tax rate and rationalize corporate incentives.
The bicameral conference committee report which harmonized provisions of the estate and general tax amnesty bills (HB Nos. 4814 and 8554 and Senate Bill [SB] No. 2059) was ratified by both Houses of Congress. The bill is just waiting for the signatures of the senate president, speaker of the House of Representatives and the president and is expected to be passed early this year.
On the TRAIN Law, the exemption from value-added tax (VAT) of medicines prescribed for diabetes, high cholesterol and hypertension will be implemented starting January 1, 2019, pursuant to Joint Administrative Order No. 2-2018 of the Department of Finance, Bureau of Internal Revenue (BIR) and Food and Drug Administration and BIR Revenue Regulation No. 25-2018, both dated December 21, 2018. This is in compliance with Section 109 (AA) of the Tax Code, as amended by the TRAIN Law.
However, the excise taxes of gasoline and diesel will go up by additional P2.00 per liter effective January 1, 2019. An additional P1.00 per kilogram for liquefied petroleum gas (LPG) and an additional P1.00 per liter for kerosene products will also be imposed. These excise taxes will be on top of the VAT already imposed on these petroleum products. However, the implementation of the increases may be deferred until oil companies shall have submitted their inventory reports, the deadline of which was on December 31, 2018.
1. HB No. 8453, or the proposed Real Property Valuation and Assessment Reform Act (Package 2 of the TRAIN) — It will mandate the Bureau of Local Government and Finance (BLGF) to develop and maintain a uniform valuation standard, consistent with international standards, which will guide local government appraisers and assessors in preparing their schedules of market value. This bill was already approved on third reading in the Lower House on November 12, 2018.
2. HB No. 8645 (Package 4 of the TRAIN), also known as the proposed Passive Income and Financial Intermediary Act — It seeks to make the tax system for the financial sector fairer, more efficient, and more regionally competitive. Its key provisions include the yearly reduction in the final tax on stock transactions from 0.6 percent to 0.1 percent. The bill also harmonizes the tax rates on capital gains on unlisted stocks for both individuals and corporations into a unitary final tax rate of 15 percent. It also (1) fixes the gross receipts tax at 5 percent from the current 0-7 percent, removing distinctions according to security type, nature and maturity; (2) standardizes at 0.75 percent the documentary stamp tax (DST) rate from the current 0-1 percent on the sale of original issue shares of stock, bonds; and (3) removes DST on sales or transfer of shares or certificates of stock. It was approved by the Lower House on third reading on December 4, 2018.
Also, HB No. 8677 which proposes to raise excise taxes on tobacco products and HB No. 8618 which seeks to raise excise tax rates on alcohol from the rates imposed under the Tax Code have also gotten the final and third reading nod of the Lower House. HB No. 8618 will also levy on sparkling wines a 15 percent ad valorem tax per liter, which is not imposed in the present system. HB No. 8618 in particular seeks to address the perceived inequality on the excise tax collections on alcohol products.
SB No.1979 (in relation to HB No. 8400, otherwise known as An Act Establishing the Fiscal Regime for the Mining Industry), is also now pending with the Ways and Means Committee of the Senate. The bill aims to rationalize taxes and royalties related to mining, and enhance the government’s share in the industry’s profits.
The Senate, on the other hand, approved on final reading SB No. 1616 in December 2018, extending the authority of the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) to grant incentives to tourism enterprises until December 31, 2029. The bill seeks to amend RA No. 9593 or the Tourism Act of 2009 to allow the implementation of the incentives scheme to tourism enterprises for another 10 years. Under the current law, TIEZA has only until August 2019 to grant its incentives.
Indeed, there are many tax measures expected to be passed this year. No doubt, 2019 will be another dynamic year in the tax arena.
Euney Marie J. Mata-Perez is a CPA-Lawyer and the Managing Partner of Mata-Perez, Tamayo & Francisco (MTF Counsel). She is a corporate, M&A and tax lawyer. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. If you have any question or comment regarding this article, you may email the author at firstname.lastname@example.org or visit MTF website at www.mtfcounsel.com
From The Manila Times website on January 3,2019.