Press Release
March 4, 2015

Angara stresses need for transparency, accountability

The Senate Ways and Means Committee has reported out on Tuesday the Tax Incentives Management and Transparency Act (TIMTA) which seeks to promote transparency and accountability in the grant and administration of tax incentives to business entities and private individuals and corporations.

"The Philippines remains strongly competitive in the region in attracting investments. The steady stream of FDIs or foreign direct investments into our economy is not a mere coincidence. It is through the provision of tax incentives, among our other fiscal strategies, that we are able to promote investments that make us among the top emerging economies in the region," said Angara, chairman of the Senate ways and means committee, who sponsored the measure.

Senate Bill No. 2669, a consolidation of bills authored by Senate President Franklin Drilon and Senate Pro Tempore Ralph Recto, provides for the monitoring of tax incentives with the creation of a Tax Incentives Information (TII) section in the annual Budget of Expenditures and Sources of Financing (BESF).

Angara clarified that the TIMTA does not, in any way, affect the independence or autonomy of the investment promotion agencies (IPAs) or other government agencies (OGAs) to administer incentives granted by law to registered business entities and qualified private individuals or corporations.

The senator cited a report from the Department of Finance (DOF) showing that the total amount of tax expenditures for investment incentives in 2011 reached P144 billion, which comprised 1.5 percent of gross domestic product, 9 percent of actual government spending and 11 percent of government revenues that year.

"It should be emphasized as well that the proposed monitoring scheme for incentives is not an entirely new bureaucratic layer that would entail additional burden to the IPAs, OGAs, registered enterprises, private individuals and corporations," the sponsor said.

He explained that the only requirement is for IPAs and OGAs to submit an annual report, in the form of a TII report, which will include tax incentives claimed as reflected already in the tax returns of business entities, private individuals or corporations.

SB 2669 also seeks the establishment of a Tax Incentives Tracking Program of all tax incentives granted, and the setting-up of stringent reportorial schemes to the President and to Congress.

The Tax Incentives Tracking Program will be used by the DOF, Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC) to monitor tax incentives granted by the IPAs and OGAs, project tax incentives for future years, and to conduct an annual evaluation study to determine the impacts of the tax incentives on the Philippine economy.

"TIMTA provides a solution for the lack of empirical data on fiscal incentives and what it reciprocates to the economy. It allows policymakers to conduct a cost-benefit analysis of fiscal incentives to make better decisions, going forward, in crafting or revising laws, in overseeing the implementation of existing investment-related laws, and in managing the nation's finances," Angara said.

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