House bill simplifying passive income, financial taxes approved on 2nd reading
MANILA, Philippines – The House of Representatives approved on 2nd reading the bill that would simplify the taxes imposed on financial investors.
On Wednesday, September 4, lawmakers gave their approval to House Bill (HB) No. 304, which is also called the Passive Income and Financial Intermediary Tax Act (Pifita), through viva voce voting or a vote of ayes and nays.
HB No. 304 is the 4th tranche of the Comprehensive Tax Reform Program (CTRP) being proposed by President Rodrigo Duterte's government.
House Deputy Majority Leader Juan Pablo Bondoc moved to substitute the Pifita bill with a new version of the measure just before it was approved on 2nd reading.
HB No. 304 will have to undergo 3rd and final reading before the tax measure is transmitted to the Senate.
Under the Pifita bill, the tax rates on interest income from regular savings and short-term deposits would be decreased from the current 20% to 15%. The tax rates on interest income from foreign currency deposits and long-term deposits would also be lowered to 15%. Dividend income, meanwhile, would be fixed at 15%, except for intercorporate bonds.
The bill would also exempt non-monetary documents like diplomas, transcript of records, and school certifications from the payment of documentary stamp tax.
Among the other key provisions of the Pifita bill are the imposition of the following taxes:
|Tax Type||Tax Rate|
|Interest income of individuals and corporations||15%|
|Capital gains of unlisted stock||15%|
|Presumptive capital gains on listed debt securities||0.1%|
|Capital gains on unlisted debt securities||15%|
|Income on banks and non-bank financial intermediaries||5%|
|Premium tax on life, health, HMO, pension, and pre-need insurance||2%|
According to House ways and means committee chairperson Joey Salceda, the Pifita bill aims to provide neutrality in the tax treatment across financial institutions and financial instruments and simplify what has become a "complex" tax system.
“The inclusion of the capital income and financial services in the current administration's [CTRP] provides a window of opportunity to achieve the much-needed reform in the financial sector," said Salceda.
Tax bills have been breezing through the legislative mill in the House after President Rodrigo Duterte called on Congress to pass the remaining CTRP tranches during his 4th State of the Nation Address.
The bill imposing additional taxes on alcoholic drinks, electronic cigarettes, and vaping products was the first measure approved by the House on 3rd and final reading in the current 18th Congress. – Rappler.com