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House approves reforms to taxes on financial transactions, passive income

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RG Cruz, ABS-CBN News

MANILA - Congressmen on Monday approved a bill that reforms taxes on passive income and financial transactions.Voting 258-3 with zero abstention, the House of Representatives approved on third and final reading House Bill No. 4339, which simplifies the taxation of the financial sector, amending the National Internal Revenue Code of 1997.The bill aims to simplify the taxation of the financial sector, make tax compliance easier and more equitable, and boost the government&#x27;s tax efforts.Under the bill, a 20 percent tax is imposed on income interest, yield, or other monetary benefit earned or received from any current bank deposit, deposit substitute, trust fund and similar arrangements. It also reduces the number of tax bases and rates applicable to passive income, financial intermediaries, and financial transactions from 74 to 52.The measure also imposes a single 5 percent gross receipt tax (GRT) rate on the income of banks, quasi-banks, and other non-bank financial intermediaries.It likewise imposes a “harmonized” 2 percent tax on premiums of pre-need, life insurance, and health maintenance organizations (HMOs) products.It also repeals the documentary stamp tax on the following:<ul>	<li>Certificate of profits or interest of property or accumulations; Bank checks, drafts, certificates of deposit not bearing interest and other instruments; Bills of exchange or drafts;</li>	<li>Stamp tax on Proxies for voting of any elections;</li>	<li>Powers of Attorney;</li>	<li>Certificates</li></ul>It also repeals the exemption of foreign currency deposits from interest income tax. Likewise, it removes the excise tax exemption of pick-up trucks introduced under the Tax Reform for Acceleration and Inclusion or TRAIN law.Opponents of the bill however said the measure leads to massive revenue losses when the country needs to retain the level of tax collections from passive income and financial transactions.‘Sa panahon ng matinding krisis at taas-presyo, yung buwis pa ng mga mayayaman ang babawasan sa halip na tanggalin ang VAT sa bilihin na pasan-pasan ng ordinaryong mamamayan,&quot; said Gabriela Rep. Arlene Brosas.(At a time of severe crisis and high inflation, we are giving tax relief to the rich instead of removing the VAT on goods that are shouldered by ordinary citizens.)Brosas said the bill assumes that lowering and simplifying tax rates and bases will deepen the country&#x27;s capital market and encourage more Filipinos to put their money in bank deposits, pre-need insurance, stocks and other passive income. &quot;In reality, big players in the financial markets will emerge as the biggest winners under this measure, not the small percentage of typical Filipino middle class who has savings or who has insurance,&quot; she said.Brosas and members of the Makabayan bloc also opposed the bills imposing a 12 percent <a href="https://news.abs-cbn.com/business/11/14/22/vat-on-netflix-and-other-digital-services-okd-by-house" target="_blank">VAT on digital services</a>, and a P100 per kilo excise tax on single-use plastic bags. The administration of President Ferdinand Marcos Jr. is eyeing several new taxes to help pay for the country&#x27;s ballooning debt which already hit a record <a href="https://news.abs-cbn.com/business/11/03/22/ph-debt-grows-to-p1352-trillion-amid-peso-weakness" target="_blank">P13.52 trillion</a> in September. <ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/05/25/22/dof-eyes-new-taxes-wider-vat-to-pay-rising-debt">DOF pushing new taxes, wider VAT, halt to income-tax deductions to pay high debt</a></li>	<li><a href="https://news.abs-cbn.com/business/05/19/20/netflix-facebook-and-google-to-get-taxed-under-salceda-bill">Netflix, Facebook and Google to get taxed under Salceda bill</a></li></ul><div>RELATED VIDEO</div><figure class="op-interactive"><iframe allow="autoplay; fullscreen" frameBorder="0" height="100%" id="ivsplayer01" scrolling="no" src="https://player.ivideosmart.com/ivsplayer/v4/dist/html/iframe-src.html?iframeid=ivsplayer01&amp;key=e8c22c015ca9eafa76f1e3edfa03c603&amp;spid=3001339&amp;vid=2246535" width="100%"></iframe></figure><div class="iwantbar">Watch more News on <a href="https://www.iwanttfc.com/#!/browse/Genres/News/tag_id_genres/id_news" target="_blank">iWantTFC</a></div>

The bill aims to simplify the taxation of the financial sector, make tax compliance easier and more equitable, and boost the government's tax efforts.

House approves reforms to taxes on financial transactions, passive income

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House approves reforms to taxes on financial transactions, passive income

RG Cruz,

ABS-CBN News

Published November 14, 2022 10:16 PM PHT

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House of Representatives

House Bill No. 4339

HB 4339

Tax Reform 4

taxation

taxes

tax reform

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