Package 4 of comprehensive tax reform program approved on third reading

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The House of Representatives approved on third and final reading last night House Bill 304 or the Passive Income and Financial Intermediary Taxation Act (PIFITA), more popularly known as Package 4 of the Duterte administration’s Comprehensive Tax Reform Program.

The chamber voted 186 in favor of the bill, ix rejected it while two abstained. The bill now proceeds to the Senate.

Salceda, chairman of the House Committee Ways and Means, said HB 304 will rationalize the multiple tax rates and bases in the financial sector to make it “simpler, fairer, more efficient and regionally competitive.” Amended provisions of the National Internal Revenue Code of 1997 are Sections 22, 24-30, 32, 34, 37-39, 42, 51, 52, 54, 56, 57, 108, 121-13, 174, 176, 179, 181-191, 194, 195-199 of the National Internal Revenue Code of 1997.Among the key provisions of the bill are the imposition of the following tax rates: 15 percent of interest income of individuals and corporations; 15 percent for capital gains on unlisted stocks; 0.

Among the NIRC tax provisions repealed under the bill are tax exemptions/preferential rates of mutual savings banks and cooperative banks; offshore banking units and foreign currency deposit units; gains from sale of bonds, debentures and other certificates of indebtedness with maturity of more than five years.

A final tax of 15 percent shall be imposed on cash and/or property dividends received by an individual from a domestic corporation or from a joint-stock company, insurance, mutual fund companies, collective investment schemes and regional operating headquarter of multinational companies. For presumptive capital gains on listed and traded debt instruments and other securities not mentioned, a final tax at the rate of 1/10 or 1 percent will be imposed on the gross selling price of the debt instrument or securities.

 

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