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Two more tax reforms move towards final House OK
By Charmaine A. Tadalan
Reporter
THE HOUSE of Representatives on Wednesday night approved on second
reading a proposed reform that will give the government a bigger share
in miners’ revenues and will standardize real property valuation and
assessment by local governments.
The chamber approved House Bill (HB) No. 8400, An Act Establishing
the Fiscal Regime for the Mining Industry, which will raise the
effective tax rate (ETR) on the industry to 24.33% from 21.48% currently
that is already among the highest in Asia.
“[The] existing [ETR] is 21.48%, DoF (Department of Finance) is
29.18%. These numbers, including [the] HB ETR, are based on the FS
(financial statements) of 55 large taxpayers of BIR (Bureau of Internal
Revenue),” DoF Director Elsa P. Agustin explained in a mobile phone
message on Thursday.
House Ways and Means committee chairperson Rep. Estrellita B. Suansing of Nueva Ecija’s 1st district said the bill will be taken up on third reading as soon as lawmakers return from their Oct. 12-Nov. 11 break.
“Third-reading for mining tax is when we resume in November,” Ms.
Suansing said in a text message, adding that the plenary will likely
shift its attention afterwards to the proposed general tax amnesty bill
which her committee approved in September.
“Next… priority bill is the tax amnesty bill.”
The proposed mining tax reform will cut the royalty on large-scale
mining operations in mineral reservations to three percent from the
current five percent based on gross output, as opposed to the DoF
proposal to impose a five percent royalty based on gross output across
all mining operations, large and small.
It will also impose a 1-5% margin-based royalty on all large-scale
mining companies outside mineral reserves, specifically: one percent for
mining companies with 1-10% margin; 1.5% for mining firms with above
10% to 20% margin; two percent for those with above 20% to 30% margin;
2.5% for those with above 30% to 40% margin; three percent for firms
with above 40% to 50% margin; 3.5% for those with above 50% to 60%
margin; four percent for those with above 60% to 70% margin and five
percent for miners with margins beyond 70%.
Small-scale miners, meanwhile, will be levied a royalty equivalent to
one-tenth of one percent of gross output, whether the contractor
operates within or outside mineral reservations.
The bill defined margin as “the ratio of income from mining
operations before corporate income tax to gross output” and gross output
as “the actual market value of minerals or mineral products from each
mine or mineral land operated as a separate entity, without any
deduction for mining, processing, refining, transporting, handling,
marketing or any other expenses.”
The royalty will be imposed on top of other taxes, such as the
corporate income tax, excise tax which the Tax Reforms Acceleration and
Inclusion Act (TRAIN) doubled to four percent, the royalty to indigenous
communities, and local business tax among others.
Moreover, the proposed measure will also introduce a 1-10%
margin-based windfall profit tax on income before the corporate income
tax: a one percent windfall profit tax on mining businesses with over
35% to 40% margin; two percent if over 40% to 45% margin; three percent
if over 45% to 50% margin; four percent if over 50% to 55% margin; five
percent if over 55% to 60% margin; six percent if over 60% to 65%
margin; seven percent if over 65% to 70% margin; eight percent if over
70% to 75% margin; nine percent if over 75% to 80% margin; and 10% if
over 80% margin.
The measure also introduced a provision disallowing deduction of
interest expense once a miner records a 3:1 debt-to-equity ratio, which
reflects how much a company is financed by debt.
Also on Wednesday, the chamber approved on second reading HB 8453, or
the proposed Real Property Valuation and Assessment Reform Act.
It will mandate the Finance department’s Bureau of Local Government
and Finance (BLGF) to develop and maintain a uniform valuation standard,
consistent with international standards, which will guide local
government appraisers and assessors in preparing their schedules of
market value (SMV).
SMVs will be submitted to the regional offices of the BLGF and the Bureau of Internal Revenue for review.
Reviewed SMVs will then be subject to approval of the Finance Secretary.
“The approved SMV shall be used as basis for the determination of
real property-related taxes of national and local governments,” the bill
explained.
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General tax amnesty awaits plenary action in the Senate
[ bworldonline.com ]
SENATOR Juan Edgardo M. Angara, chairman of the Senate Ways and
Means committee, on Tuesday submitted a general tax amnesty bill for
plenary action.
Senate Bill No. 2059, or the proposed Tax Amnesty Act of 2018, covers
tax obligations for years up to 2017 with or without assessments in
three major areas: estate taxes, general taxes and delinquent accounts.
“We push for a general tax amnesty today not just to give taxpayers a
chance to adjust to the new rules that were put in place last year but
also to lighten the load of an overburdened BIR (Bureau of Internal
Revenue) in the hopes that they can now focus on their main mandate of
collection,” he said in his sponsorship speech.
“We envision that with this amnesty, all parties involved may be absolved and unburdened of the sins of the past.”
On estate tax amnesty, Mr. Angara said qualified taxpayers can avail
of the reprieve and instead pay six percent based on the decedent’s
total net estate, if no estate tax return was filed, or on net
undeclared estate if a return had been filed.
On the amnesty for delinquency in value-added and excise taxes,
qualified corporate parties will have to pay five percent of total net
worth or a minimum tax depending on their subscribed capital will be
collected.
On amnesty for delinquent accounts, taxpayers can avail of the following rates:
• 40% of the basic tax for delinquency assessments which have become final and executory;
• 50% of the basic tax for those subject
of pending criminal cases with criminal information filed in court for
tax evasion and other criminal offense and pending cases involving
fraud, illegal exaction and transactions, and malversation of public
funds and property;
• 60% of the basic tax for cases subject to final and executory judgement by the court.
Mr. Angara said those who will avail of the tax amnesty program will
be immune from civil, criminal, and administrative cases and penalties
under the National Internal Revenue Code as amended.
The same measure also puts in place an information management system
and automatic exchange between the Bureau of Internal Revenue and its
foreign counterparts to validate tax declarations and subsequent
compliance of those availing of the amnesty offer.
Senate Majority Leader Juan Miguel F. Zubiri told reporters that the
Senate hopes to approve the measure between November and January next
year. “We committed to pass it — if not next month — hopefully by
January, we can approve the tax amnesty measure,” he said.
The measure forms part of a wide-ranging tax reform program of the
administration of President Rodrigo R. Duterte that aims to shift the
tax burden more on to those who can afford to pay, besides raising more
cash to finance bigger state spending on infrastructure. — Camille A. Aquinaldo
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KNOWING YOUR BIR REGULATIONS AND ISSUANCESRevenue Regulations (RRs) are issuances signed by the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, that specify, prescribe or define rules and regulations for the effective enforcement of the provisions of the National Internal Revenue Code (NIRC) and related statutes
Revenue Memorandum Orders (RMOs) are issuances that provide directives or instructions; prescribe guidelines; and outline processes, operations, activities, workflows, methods and procedures necessary in the implementation of stated policies, goals, objectives, plans and programs of the Bureau in all areas of operations, except auditing.
Revenue Memorandum Rulings (RMRs) are rulings, opinions and interpretations of the Commissioner of Internal Revenue with respect to the provisions of the Tax Code and other tax laws, as applied to a specific set of facts, with or without established precedents, and which the Commissioner may issue from time to time for the purpose of providing taxpayers guidance on the tax consequences in specific situations. BIR Rulings, therefore, cannot contravene duly issued RMRs; otherwise, the Rulings are null and void ab initio
Revenue Memorandum Circular (RMCs) are issuances that publish pertinent and applicable portions, as well as amplifications, of laws, rules, regulations and precedents issued by the BIR and other agencies/offices.
Revenue Bulletins (RB) refer to periodic issuances, notices and official announcements of the Commissioner of Internal Revenue that consolidate the Bureau of Internal Revenue's position on certain specific issues of law or administration in relation to the provisions of the Tax Code, relevant tax laws and other issuances for the guidance of the public.
BIR Rulings are official position of the Bureau to queries raised by taxpayers and other stakeholders relative to clarification and interpretation of tax laws.
