THE plan to impose a flat 6 percent rate for donor’s and estate taxes as part of the Comprehensive Tax Reform Program (CTRP) has earned the support of two tax research groups, the Department of Finance (DoF) said Tuesday.
In a statement, the DoF noted the National Tax Research Center (NTRC) and the Tax Management Association of the Philippines (TMAP) have agreed that lowering the tax rates on property transfers to a uniform level should be part of the CTRP.
NTRC Director Trinidad Rodriguez was quoted by the DoF as saying it simplifies the system. “On the imposition of a uniform 6 percent tax rate on all transfer transactions, be it through sale or through inheritance or donation, we will now have a uniform tax rate of 6 percent, so that will greatly simplify the tax system,” Rodriguez said.
“On the bills regarding the exemptions from donor’s tax of donations to calamity-stricken areas, we fully support that,” he added.
TMAP President Maria Lourdes Lim was also quoted as saying that “in terms of the donor’s tax proposal, we support the 6 percent reduction because it will be more simplified and it will be uniform to the other transfer taxes.”
Rodriguez recommended that administrative safeguards be retained on tax exemptions for donations to victims of calamities to prevent any incentive abuse.
“It should be mentioned that donations made in times of calamities may be made exempt from the donor’s tax if channeled through the enumerated donee, and if it complies with the requirements of the Tax Code. These safeguards imposed by law have two purposes: firstly, to ensure that all claims for exemptions and deductions are legitimate, and to avoid unfounded claims of the incentives; second, to protect the donors from bogus organizations,” she said.
Adjustments to the estate and donor’s taxes form part of House Bill (HB) 5636 or the Tax Reform Acceleration and Inclusion Act (Train) that was approved on third and final reading by the House of Representatives voting 246-9-1 on May 31, before the Congress adjourned.
Train also aims to slash personal income tax rates, and offset the revenue loss by adjusting the excise taxes on fuel and automobiles and broaden the value-added tax base.
HB 5636 is a consolidation of the original tax reform bill—HB 4774–and 54 other related measures. Train is the first package of the Duterte administration’s CTRP.
The Senate ways and means committee will resume discussions on HB 5636 when the Congress opens for the second regular session in July.