Manila, Philippines—Senators raised questions as to the lifting of certain Value Added Tax (VAT) exemptions particularly on the housing sector, during the sixth hearing on the comprehensive tax reform program of the Duterte administration.
Last July 13, the Senate Committee on Ways and Means led by Senator Juan Edgardo M. Angara scrutinized the House Bill (HB) No. 4774, also known as the Tax Reform for Acceleration and Inclusion (TRAIN). According to the Department of Finance (DOF), one main supporter of the tax reform, HB 4774 only aims to redefine the tax regime by making it “simpler, fairer and more efficient, characterized by low rates and a broad base that promotes investment, job creation, and poverty reduction.”
Senator Cynthia A. Villar questioned the provisions of the bill which forward the lifting of the exemptions on the housing sector including the lease of residential units with monthly rental of PHP 12,800, and remarked that this may hurt the sector.
Angara added that this proposed measure, while it may contribute to the broadening of the tax base, may worsen the existing conditions. Additionally, Senator JV Ejercito, chairman of the Senate Committee on Urban Planning, pinpointed that the government might want to reevaluate such a measure and focus on gauging its social impacts.
The other transactions that may now be covered by VAT as per the provisions of the HB 4774 include the following:
- Importation of professional instruments, etc. belonging to persons coming to settle in the Philippines, for their personal use;
- Transactions which were VAT exempt under special laws;
- Sales by agricultural cooperatives;
- Gross receipts from lending activities by credit or multi-purpose cooperatives;
- Sale of real property utilized for low-cost and socialized housing;
- Importation of fuel, goods, and supplies by persons engaged in international shipping of air transport operations;
- Sales by qualified non-agricultural, non- electric and non-credit cooperatives.
Duterte’s tax reform, comprised of four packages, was designed in such a way to ensure speedy enactment. The first of these packages, the HB 4774, had already passed the scrutiny of the lower house and was approved in its third and final reading last May. ###