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May 27, 2024

DOF pushes passage of reforms in property valuation, financial taxation

The Department of Finance (DOF) is pushing for the passage of the previous administration’s remaining tax reform packages on improving real property valuation and simplifying financial taxation in the incoming 19th Congress.

At the same time, Finance Secretary Benjamin Diokno is also supporting measures to tax digital services and transactions to ensure that the country’s tax system remains fair and equitable.

“The tax on digital services, I think it’s only fair that we tax these, isn’t it? If you’re going to buy from regular stores, the government taxes them. Then why is it that when it comes to digital [transactions], you won’t impose taxes,” Diokno said.

As for the remaining packages of former President Rodrigo Duterte’s comprehensive tax reform program (CTRP), Diokno said the DOF will continue to push for these “revenue-neutral” measures.

“We won’t collect additional revenues from that, but it will simplify the tax system a lot. So, we will push for that and then we expect that could be approved before the end of the year and that would be implemented next year,” Diokno said.

The DOF chief is referring to the reforms in real property valuation, which aims to broaden the tax base used for property and property-related taxes of the national and local governments and make these on par with international standards; and the proposed Passive Income and Financial Intermediary Taxation Act (PIFITA), which seeks to simplify the taxation of passive income, financial services, and transactions.

Reforming the real property valuation system will improve the tax collections of the local government units (LGUs) without increasing the existing tax rates or imposing new taxes.

The PIFITA, on the other hand, will reduce the number of tax rates in the financial sector to help make the country more competitive in attracting capital and investments that are urgently needed to fund large-scale infrastructure projects, create more and better jobs, and boost economic growth

Under the administration of former President Duterte, the DOF was able to successfully work on the congressional passage and implementation of several packages of the CTRP.

These include the Tax Reform for Acceleration and Inclusion Act (TRAIN) and the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law, which significantly reduced income taxes for individuals and corporations, respectively.

The Tax Amnesty Act and the increase in the taxes on sin products such as cigarettes, alcoholic beverages, e-cigarettes, and vapor products were also passed under the Duterte administration.