2019 TAX AND LEGAL HIGHLIGHTS
By: Euney Marie J. Mata-Perez on December 26,2019
THIS year passed like a breeze. We just celebrated Christmas. Everyone is still in a holiday mood. In our last article for the year, we deem it fit to look back at 2019 and review some legislative highlights on the tax and economic reform fronts.
In February, we saw the passage of Republic Act 11213, or the “Tax Amnesty Act.” While President Rodrigo Duterte vetoed the general amnesty tax provisions, the estate tax amnesty and the amnesty on delinquents became effective. The implementing rules of the estate tax amnesty became effective on June 15, giving taxpayers two years, or until June 14, 2021, to avail themselves of this. Those on the amnesty on delinquents, on the other hand, became effective on April 24, so taxpayers have until April 23 next year to take advantage of this amnesty.
Also, Duterte signed on February 21 Republic Act 11232, or the “Revised Corporation Code,” which amended the 38-year-old code and aimed to improve corporate governance and the ease of doing business in the Philippines.
On the tax reform front, none of the remaining tax reform bills saw passage this year. Deliberations on them were stalled by the May midterm elections. While most of these measures were refiled and approved by the House of Representatives after the 18th Congress opened in the third quarter, they remain pending with the Senate. As bills aimed at supporting the President’s economic and tax reform agenda, we expect them to be passed in 2020.
If the proposed Comprehensive Income Tax and Incentives Rationalization Act (Citira) — which aims to lower the corporate income tax rate from 30 percent to 20 percent and rationalize our fiscal or tax incentives — is passed in 2020, we expect a pro-rata application of it during the year. This means taxpayers may be required to allocate income before its enactment and those they earned thereafter.
House Bill (HB) 304 or the “Passive Income and Financial Intermediary Taxation Act,” is also expected to be passed next year. In fact, this measure could be approved before Citira, as it is less controversial.
There are other revenue bills that Congress has been working at and may be passed this year. One is HB 5257, which proposes to impose a new 5-percent tax on the annual gross income of Philippines offshore gaming operators or POGOs, replacing the current 2-percent gross revenue tax imposed on Philippine Amusement and Gaming Corp. licensees.
It also proposes to impose a 25-percent tax on salaries, wages, annuities, compensation, remuneration, honoraria and allowances received by employees from a licensed operator.
Other bills are on the Motor Vehicle Road Users’ Tax, the Mining Fiscal Regime and tax on single-use plastics.
We also look forward to the passage of several economic reform bills. Among these are the proposed amendments to the Public Service Act, RA 7042 or the “Foreign Investment Act of 1991” and RA 8762 or the “Retail Trade Liberalization Act.”
Clearly, there are still measures that need to be passed to help achieve the Duterte administration’s tax and economic reform goals. Thus, we expect 2020 to be another exciting and busy year.
In any case, we wish to thank everyone who has supported our column. We wish you all a blessed Christmas and prosperous new year ahead.