Finance Secretary Benjamin E. Diokno has committed to pursue the passage of the remaining tax reform packages that were left behind by the Duterte administration involving real property valuation and financial taxation.
Once in the 19th Congress opens, Diokno said the Marcos administration would push for the passage of the proposed measures seeking to overhaul the real property valuation and simplify the financial taxation.
Diokno is referring to the reform in real property valuation, which aims to broaden the tax base used for property and property-related taxes of the national and local governments and make these on par with international standards.
The financial taxation proposal, on the other hand, involves the Passive Income and Financial Intermediary Taxation Act (PIFITA), which seeks to simplify the taxation of passive income, financial services, and transactions.
Reforming the real property valuation system will improve the tax collections of the local government units without increasing the existing tax rates or imposing new taxes. It will also make property valuation transparent, reliable, and attuned to market developments.
The PIFITA, meanwhile, will reduce the number of tax rates in the financial sector to help make the country more competitive in attracting capital and investments that are urgently needed to fund large-scale infrastructure projects, create more and better jobs, and boost economic growth.
According to Diokno, the two pending tax reforms are “revenue-neutral” measures.“
We won’t collect additional revenues from that, but it will simplify the tax system a lot,” Diokno said. “So, we will push for that and then we expect that could be approved before the end of the year and that would be implemented next year.”
Under the administration of former President Duterte, the Department of Finance (DOF) was able to successfully work on the congressional passage and implementation of several packages of the CTRP.
These include the Tax Reform for Acceleration and Inclusion Act (TRAIN) and the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law, which significantly reduced income taxes for individuals and corporations, respectively.
The Tax Amnesty Act and the increase in the taxes on sin products such as cigarettes, alcoholic beverages, e-cigarettes, and vapor products were also passed under the Duterte administration.
Moreover, Diokno said the will also DOF support measures to tax digital services and transactions to ensure that the country’s tax system remains fair and equitable.“
The tax on digital services, I think it’s only fair that we tax these, isn’t it? If you’re going to buy from regular stores, the government taxes them. Then why is it that when it comes to digital [transactions], you won’t impose taxes?,” Diokno said.
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