SENATE President Aquilino Pimentel 3rd wants to amend Republic Act 10708 or the Tax Incentives Management and Transparency Act (TIMTA) to enhance State fiscal management and accountability.
He filed on February 21 Senate Bill 1701 expanding the coverage of TIMTA, which established a strict reportorial system of the tax incentives granted to registered investments.
“It was enacted to address a significant question: Do the current tax incentives cost the government more compared to the benefits that the investments bring?” Pimentel said.
There are 123 laws that provide investment-related tax incentives, which are administered by Investment Promotion Agencies (IPAs). Meanwhile, there are 192 laws that provide non-investment related tax incentives, which are administered by other government agencies (OGAs) such as the Cooperative Development Authority (CDA), Department of Social Welfare and Development (DSWD), and the Bureau of Internal Revenue (BIR).
SB 1701 seeks to include within the coverage of TIMTA other registered entities enjoying tax incentives, which are administered by OGAs.
“The rapid increase in the grant of these incentives, although with laudable aims, has resulted in considerable foregone revenue on the part of the government,” Pimentel said. “This situation warrants thorough evaluation of these incentives in terms of stimulating growth and other socio-economic development, both actual and projected, in the concerned sector and in the Philippine economy.”
Hence, it is “necessary to likewise subject these entities to the strict reportorial system of TIMTA,” the Senate chief added.
“At present, the coverage of TIMTA includes only business entities registered with IPAs, thus, providing a limited view of the entire situation,” he said.
The expanded TIMTA coverage will provide enhanced and in-depth gathering, monitoring, review and analysis of relevant data, resulting in more effective and accountable fiscal management of the government, he said.
“It is the policy of the State to further enhance its fiscal management by establishing greater transparency and accountability on the part of relevant government agencies in their grant of tax incentives,” Pimentel added.
IPAs refer to government entities created by law, executive order, decree or other issuance, in charge of promoting investments, administering tax and non-tax incentives, and/or overseeing the operations of the different economic zones and freeports in accordance with their respective charters.
These include the Board of Investments, Philippine Economic Zone Authority, Bases Conversion and Development Authority, Subic Bay Metropolitan Authority, Clark Development Corporation, John Hay Management Corporation, Poro Point Management Corporation, Cagayan Economic Zone Authority, Zamboanga City Special Economic Zone, Phividec Industrial Authority, Aurora Pacific Economic Zone and Freeport Authority, Authority of the Freeport of Bataan, Tourism Infrastructure and Enterprise Zone Authority and all other similar authorities that may be created by law in the future.