Corporate Income Tax Reform Bill And Other Financial News7 min read
Land Bank, DA launch P10B lending program for LGUs
The Land Bank of the Philippines and the Department of Agriculture (DA) announced the rollout of a new lending program for local government units (LGUs). The program will allow LGUs to purchase palay from local farmers and cushion them from the effects of the drop in palay prices that is being experienced in some regions due to stockpiling or hoarding by rice traders.
Landbank announced the launch of the “PAlay aLAY sa Magsasaka ng Lalawigan (PALAY ng Lalawigan) Program” program last Friday (September 13), during a media briefing at their head office.
The Bank will provide P10B for the PALAY ng Lalawigan in order to help provincial, municipal, and city governments in the nations rice-producing areas buy palay from small farmers, at the low interest rate of 2% per annum.
The pricing will be aligned to the Agricultural Credit Policy Council (ACPC) Governing Board’s recent announcement, which saw wet palay priced at P16 per kilo and dry palay at P19 per kilo.
“This is a direct response of the Bank, together with the Department of Agriculture, to the call of the national government for a concerted effort of government agencies serving the agriculture sector to firm up its support for our palay farmers in the wake of the impact of lower palay prices,” as stated by Cecilia C. Borromeo, President and CEO of Land Bank.
PALAY ng Lalawigan is a complimentary program to the Memorandum of Agreement (MOA) that was signed by both the DA and Land Bank on August 28, 2019. The MOA is for the implementation of the Expanded Survival and Recovery Assistance Program for Rice Farmers (SURE Aid) Program.
The SURE Aid Program will provide one-time, zero-interest, no collateral loans of P15,000 that will be payable within an eight-year period to be rice farmers who till at least one hectare of rice farm and below
The SURE Aid Program was launched last September 2, in Zaragoza, Nueva Ecija. More than 1,000 rice farmers from Nueva Ecija and Tarlac received SURE Aid Land Bank Cash Cards during the launch.
Price hike for basic commodities eyed by manufacturers
Several manufacturers of coffee, noodles, and sardines are seeking to increase prices by as much as P1.50, but the Department of Trade and Industry (DTI) said they are still studying whether to approve manufacturer’s request.
DTI Assistant Secretary Ann Claire Cabochan says the agency is still in the process of checking if whether or not there is an upward movement on the prices of such commodities and that they will be issuing a new Suggested Retail Price (SRP) before the month of September ends.
“Tinitignan talaga ng DTI is whether any movement, especially if it’s a movement upward, is justified,” said Secretary Cabochan.
“Although alam natin may mga foreign exchange adjustment baka meron din talagang magtataas. Pero ang sinisikap ng DTI, nakikipag-usap tayo sa manufacturers na we keep the increases at really the minimum,” she added.
Manufacturers are reportedly requesting an increase ranging from P0.30 to P1.50.
Government greenlights P78M emergency funds to DA for ASF containment
P78M in emergency funding has been approved by the government for release to the Department of Agriculture (DA). The DA will be using the funds for their African Swine Fever (ASF) containment efforts.
“The Department of Agriculture through the Bureau of Animal Industry (BAI) will spend the P78M emergency fund approved by President Rodrigo Duterte and the Cabinet during last week’s meeting for biosecurity and quarantine operations, disease monitoring and surveillance, upgrading of laboratories, capacity-building, and other disease control measures,” as per the DA.
An additional P82.5M was given to the BAI, and the Agricultural Credit Policy Council (ACPC) also approved P60M worth of loan assistance for those who were affected by the first outbreak of ASF.
Since August 18, a total of 7,416 hogs have been culled as an ASF preventive measure. However, on September 9, an outbreak of ASF in Rizal and Bulacan was still confirmed by the DA.
Last September 11, dead pigs suspected to have been infected ASF, were found floating in the Marikina River as well as a creek located in Quezon City’s Barangay Bagong Silangan.
About 166 pigs were culled in Bagong Silangan on Sunday (September 15, 2019). The Quezon City government declared hog deaths were by ASF and they are currently investigating more hog deaths reported in Barangay Payatas.
Quezon City Mayor Josefina G. Belmonte said that the city veterinarian received verbal confirmation from the BAI about the ASF diagnosis.
Senate to overhaul Corporate Income Tax Reform Bill
As per Majority Leader Juan Miguel F. Zubiri, the senate is currently reviewing with a fine-toothed comb a measure to reduce the corporate income tax rate from 30% down to 20% in 2029. The measure also includes an overhaul of current fiscal incentives.
“We will go through it with a fine-toothed comb. It’s going to be different from the House of Representatives, where it’s a numbers game,” said Majority Leader Juan Miguel Zubiri in an interview on Monday.
“Here, each and every one of the Senators will have to look into these provisions,” he added.
On Friday (September 13), The House of Representatives approved House Bill No. 4157, or the Corporate Income Tax and Incentives Rationalization Act (CITIRA) on the third and final reading. The bill is part of the comprehensive tax reform program (CTRP) of the current administration.
According to Zubiri, the senate is eyeing amendments including extending the sunset period for the incentives by five to seven years instead of the two to five years provided by the revision from the House of Representatives.
The decision of the senate is to increase the gross income earned (GIE) rate to 7% from the current 5%.
The House bill provides a two-year transition period for locators who are already benefiting from the 5% GIE for over 10 years. Meanwhile, there will be a three year transition period for those who availed of the GIE for five to 10 years, and five year one for those have availed for less than five years.
CTA approves petition of PTT for a P13.3M tax refund
The Court of Tax Appeals (CTA) granted a petition from PTT Philippines Trading Corporation, a domestic corporation registered with the Subic Bay Metropolitan Authority as a Subic Bay Freeport Enterprise, for a P13.3M tax refund involving the oil company’s imported diesel in 2012.
The tax court assailed the Bureau of Customs and the Bureau of Internal Revenue’s (BIR) argument of using BIR’s Revenue Regulation No. 2-2012 as the basis for collecting P13M in taxes from PTT because RR 2-2012 does not refer to the specific Tax Code provision it wishes to implement in the first place.
In a 19-page decision, the CTA said that the PTT Philippines Trading Corporation is entitled to the P13M refund because the Tax Code, Bases Conversion and Development Act of 1992 and Special Economic Zone law provide that the act of bringing the goods into a Freeport and Economic Zone is not a taxable importation.
“Clearly, there are tax exemption privileges in the special economic zones because the law considers them as separate customs territories, which means that such jurisdictions are, by legal fiction, foreign territories. As long as the goods remain in the special economic zones or re-exported to another foreign jurisdiction, they shall continue to be tax-free,” the decision read.
PTT then paid the corresponding taxes of P13.3M under Revenue Regulation No. 2-2012 on August 28, 2013, then sold the said imported diesel fuel to duly registered locators of Clark Development Corporation (CDC) and Philippine Economic Zone Authority (PEZA) before contesting the amount of taxes it paid the government.
The CTA ruled that CDC, a duly registered enterprise in the Clark Freeport and Special Economic Zone, is exempted from paying direct and indirect taxes under the Special Economic Zone Act and in relation to Section 15 of Republic Act No. 9400 Amending the Bases Conversion Development Act of 1992.
RR 2-2012 provides for tax administration treatment of petroleum and petroleum products imported into the Philippines, including those coming in through freeport zones and economic zones and the registration of all storage tanks, facilities, depots, and terminals.
That CTA said that RR 2-2012 directly contravenes the tax exemptions granted to PTT under the Bases Conversion and Development Act of 1992, amended by RA No. 9400 creating the Subic Special Economic Zone. As such RR No. 2-2012 is of no force and effect.