By Charmaine A. Tadalan, November 21 2018; Business World
Image Credit to Business World
THE HOUSE WAYS and Means Committee on Wednesday approved the bill simplifying the tax regime for financial investors, which forms part of the government’s comprehensive tax reform program (CTRP).
After a fourth deliberation, the unnumbered Substitute Bill, which proposes to be the ”Passive Income and Financial Intermediary Taxation Act of 2019,” which proposed to a flat rate of 15% on dividend income, among others, cleared the panel in less than 10 minutes.
The committee also approved a measure increasing the excise tax on alcohol products while the chamber approved on third reading the Tax Amnesty Bill.
The final version of the substitute bill removed the 1,000-member requirement for collective investment schemes (CIS), which are entitled to tax exemptions in the measure.
The bill defined a CIS as “an arrangement whereby funds are solicited from the investing public and pooled together for the purpose of investing, re-investing, and/or trading in securities or other assets.”
The measure previously provided an exemption for a CIS from the 5% gross receipts tax, other percentage taxes and value-added tax imposed under the National Internal Revenue Code, only if it gathers at least 1,000 members.
The DoF also proposed to reinstate the documentary stamp tax on certificates, which the committee deleted during the technical working group meeting.
The present system imposes a P30 documentary stamp tax on certificates, which include certificates or documents issued by customs officers, marine surveyors, and notaries.
Among the key provisions of the measure is a flat rate of 15% on interest on certain passive income as well as on cash and/or property dividends of individuals, who are currently levied 20% and 10%, respectively.
The same 15% rate will also be levied on interest on certain passive income of domestic corporations, down from the current 20%.
The Code currently imposes a 10% rate on net capital gains of more than P100,000 and 5% on gains less than P100,000. — Charmaine A. Tadalan