House OKs bill reforming taxes on financial sector and passive income

ABS-CBN News

Posted at Sep 09 2019 10:59 PM

MANILA - The House of Representatives has approved a bill that seeks to simplify the taxation of passive income, financial services and transactions. 

Voting 186 to 6 with 2 abstentions, lawmakers passed on third reading House Bill 304, or the Passive Income and Financial Intermediary Taxation Act (PIFITA).

Albay Rep. Joey Salceda, who heads the House's tax-writing committee said PIFITA will "rationalize the taxation of the financial sector so that it becomes simpler, fairer, more efficient, and regionally competitive.” 

The bill, which is the fourth package of the Duterte administration's tax reform program, aims to cut the number of tax rates on passive income, financial services and transactions to 36 from 80 at present. 

It also seeks to reduce tax rates on interest income from regular savings and short term deposits to 15 percent from 20 percent.

Interest income from assets long-term deposits, foreign currency deposits, and dividends from stocks will also be taxed at 15 percent. 

This bill aims to lower taxes on insurance and harmonize the tax rates for life and health insurance, and non-life insurance.

Gabriela Women's Party Rep. Arlene Brosas voted against the bill saying “it grossly favors the rich who makes fortunes out of thin air in the financial sector." 

"Such tax rate reduction is again offset by the tax collections sourced from ordinary Filipinos via TRAIN 1, which is projected to reach P153 billion next year," Brosas said. 

Nueva Ecija Rep. Estrelita Suansing meanwhile said the "proposed rates will be on par with the rates imposed in the region to ensure competitiveness of the domestic capital market."

"We need to compete better in attracting capital investment, which is urgently needed to finance infrastructure, create more and better jobs, and boost inclusive and sustainable growth of the economy," Suansing said. 

The House also approved a bill lowering corporate income taxes and limiting fiscal incentives.   

- Report from RG Ccruz, ABS-CBN News