Simpler, lower, competitive rates proposed
The Tax Management Association of the Philippines (TMAP), in a proposal filed with the Ways and Means Committees of both Houses of Congress, is pushing for reforms that will bring about lower and competitive income taxes and a simpler way of collecting them.
TMAP, besides calling for a simplified income tax table, proposed amendments to the Tax Code to help address current tax issues such as the new value-added tax (VAT) refund rules.
It said revisions to the tax table include lowering the top statutory rate from 32 percent to 30 percent, which is at the same level as corporate taxpayers; and the imposition of the unified P300,000 tax-exempt threshold, which aims to simplify the various tax deductions/exemptions.
TMAP, however, proposed an increase in the capital gains tax to 10 percent for the first P1 million of the gains presumed to have been realized by a seller from the sale of capital assets, and 15 percent in excess of that.
The proposed increase in capital gains tax would bring it closer to the effective personal income tax rates and still make the rates competitive within the Asean region, it said.
The group is also proposing lower income tax rates to make Philippine workers competitive in view of workforce mobility upon the integration of the Association of Southeast Asian Nations (Asean).
TMAP also proposed to redefine tax-exempt “de minimis” benefits for salary and wage earners to exclude disguised compensation such as cash allowances.
It also recommended changes in the fringe benefits tax system to remove the
difference in tax treatment between managers/supervisors and rank-and-file employees.
Other revisions proposed were the simplification of bookkeeping and invoicing/receipting requirements which is applicable to taxpayers with annual sales of P10 million and below; and the granting of tax amnesty to enable taxpayers to start with a clean slate once they become part of the system, without fear of being harassed for non-compliance in prior years.
TMAP believes that the simplified tax system would encourage the growth of existing businesses and the creation of new ones; move businesses out of the informal sector into the formal sector; reduce corruption by increasing transparency and minimizing the points of contact between taxpayers and the Bureau of Internal Revenue (BIR); and improve compliance on the part of the taxpayer and reduced cost of collection on the part of the BIR.
Meanwhile, TMAP also proposed certain Tax Code amendments to address significant taxpayer issues arising from the sudden, radical change in interpretation by the BIR.
It said amendments seek to codify long-standing interpretations upheld by past BIR administrations, such as the deductibility of expenses, protesting assessments, appeals process on VAT refund claims, and preservation of books of accounts, among others.
Other proposed Tax Code amendments also include certain provisions to ensure that proper consultation and due process are observed by the BIR in its power to interpret tax laws, the requirement for public notice/hearing and publication for the issuance of new rules and regulations by the Department of Finance/BIR, and the payment of interest on VAT refund claims beyond a mandatory period.