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ECB ballot hints at tactics for jobs overhaul

ECB Governing Council members voted a new supervisory head last month. — REUTERS

WHEN European Central Bank (ECB) policy makers cast a secret ballot to select a new supervisory head, it was with their future leadership on their minds, according to euro-area officials familiar with the matter.
Governing Council members who voted last month for Italy’s Andrea Enria instead of the supposed frontrunner, Irish Deputy Governor Sharon Donnery, did so aware their choice could have repercussions for other senior appointments in 2019, the people said.
Donnery’s selection could have been an obstacle to her boss, Harvard-educated Governor Philip Lane, getting one of those seats and becoming chief economist, the people said, asking not to be identified because of the confidential nature of the selection process. An ECB spokesman declined to comment.
That’s the first of three of the ECB’s six Executive Board positions that are up for grabs next year. Governments will make those appointments and central bankers are concerned over how the horse-trading will play out, especially after European Parliament elections in May that could see populists gain sway.
None of the officials doubted Enria’s ability to lead the Single Supervisory Mechanism, but by thinking a few moves ahead — despite drawing criticism that they undermined their gender-diversity drive —policy makers acknowledged the risks of the upcoming reshuffle.
Governments have an incentive to appoint candidates based on nationality as much as expertise, and a small country like Ireland would typically struggle to get two senior posts in the horse-trading. The bank-supervision head isn’t on the board but has powerful sway over the region’s biggest lenders.
The chief economist proposes monetary policy, making it one of the most influential posts. It’s especially key because current holder Peter Praet is due to retire in May and his replacement should be selected before the European polls. President Mario Draghi leaves in October and Benoit Coeure, head of markets, at the end of the year.
Finance ministers’ choice this year of Luis de Guindos, formerly one of their own, as ECB vice president has already raised eyebrows at the Frankfurt-based institution because of the possible perception that its independence might be compromised by politics.
Guindos’s only challenger — before dropping out — was Lane, who has a doctorate in economics, a strong academic reputation, and central-banking experience. That battle was an omen for at least one of the officials of what the political appointment process could do to the ECB’s leadership. — Bloomberg

AirAsia named world’s best low-cost carrier

AIRASIA Group said it won its sixth consecutive title as the world’s leading low-cost airline at the World Travel Awards (WTA) Grand Final 2018.
The budget carrier said in a statement on Monday it bested 11 other airlines in the low-cost airline category, namely United Arab Emirates’ Air Arabia, Britain’s easyJet and fastjet, Dubai’s flydubai, Saudi Arabia’s flynas, America’s JetBlue and Southwest Airlines, Australia’s Jetstar Airways, Norway’s Norwegian Air, Ireland’s Ryanair and China’s West Air.
“Over the past year, we have worked hard to improve customer experience to make travel more convenient and fun, while also personalizing the end-to-end journey, and it’s incredibly rewarding to see our work pay off like this,” AirAsia Deputy Group CEO (Airlines) Bo Lingam said in the statement.
AirAsia said it also won world’s leading low-cost airline cabin crew this year, making it its second time in a row.
“[W]e remain guest-obsessed as we evolve from an airline into a travel technology company. Our guests will always be at the core of everything we do, and we believe the various travel and lifestyle ventures we are working on now — from deals and e-commerce to fintech and logistics — will only serve to further enhance the overall AirAsia experience for them,” Mr. Lingam added.
The WTA titles are awarded to the nominee with the highest number of votes from executives in the travel and tourism industry and consumer travelers. — D.A.Valdez

It’s Christmas Time In The City (12/4/18)

Grand Christmas Parade

ONE of the floats at the Venice Grand Canal’s Grand Christmas Parade in 2017.

THE Venice Grand Canal’s Grand Christmas Parade will take off on Dec. 8, a spectacle of giant character balloons, floats, marching bands, street dancers, musical performances and appearances by some of the biggest stars in Philippine entertainment including Jessy Mendiola and Jericho Rosales. Set to traverse the streets of McKinley Hill, the 3.5-km parade is inspired by the world-famous Macy’s Thanksgiving Day Parade in New York City. It will features a lineup of 12 floats, larger-than-life character balloons, over 50 mascots, and over 800 marching bands, dancers, and performers including Venetian mimes and dancers, cosplayers, dragon and lion dancers, Korean cultural dancers, St. Louis LED performers, Zumba performers and more. There will be celebrity appearances, mascot meet and greet, Holiday-themed live performances at the Venice Piazza, and a grand fireworks display to cap off the celebrations in spectacular fashion. For details, call the Concierge at 624-1971, 0917-512-9934 or visit veniceconcierge@megaworld-lifestyle.com.

Christmas at Shangri-La Plaza

THE DECORATIONS at the Grand Atrium of the Shangri-La Plaza mall.

SHANGRI-LA Plaza is all decked out in holiday trimmings inspired by the circus, with revolving carousels at the entrances, and acrobats, hot air balloons, and balls and banners suspended in the Grand Atrium. The East Atrium beckons with twinkling lights, gold tinsel and tassels; while the 50-ft Christmas tree at the Main Wing serves as a backdrop for selfies to post on social media. Santa’s Corner has been set up at the hallway by Rocky Mountain at Mid-Level 2/3 East Wing. A line-up of musical performances is all set for December, including the ABS-CBN Philharmonic Orchestra with the Ateneo Chamber Singers, indie folk band Ben&Ben, the Philippine Madrigal Singers, songstress Karylle, and various choirs. As Christmas is the Season of Giving, mallgoers have the opportunity to help less fortunate children through Grant a Holiday Wish. They can purchase Christmas angels handcrafted by local artisans from CCAP for P200. Proceeds will go to the Unang Hakbang Foundation. The mall will also hold the Rev Up Your Style raffle, with a 2018 Mini three-door Hatch Cooper, a 2018 Mini Convertible Cooper S, and six 2018 Vespa S125s up for grab. To join the raffle, shop and dine at the mall and get one raffle coupon for every P2,500 single receipt purchase. Purchases made between from Nov. 16 to Jan. 6, 2019 will be included in the first raffle draw, while those made from Jan. 7 to Feb. 17, 2019 can join the second raffle draw. For inquiries, call 370-2597/98 or visit www.facebook.com/shangrilaplazaofficial.

Magic of Christmas at Vertis North

FOR the metropolis’ northerners, Vertis North unveils an array of activities to mark the holidays. A lights and sound show, Reimagine the Magic: A Festival of Lights, will be held all Sundays through the holidays until Jan. 15. A collaboration between Ayala Land Inc. and the Walt Disney Co. Philippines, the show features thousands of lights dancing rhythmically to the tune of Disney songs and Filipino Christmas carols. Meanwhile, Laro Interactives features traditional Filipino games such as piko, limbo rock, and dama played in various areas of Vertis North Mall’s The Garden until Jan. 7. Sundays at Vertis North will see performances of Christmas Symphonies, featuring the Lighter Side Movement on Dec. 9, Schola Cantorum Scholars on Dec. 16, Voces Manila on Dec. 23, and Song Weavers Philippines on Dec. 30. In the spirit of Christmas giving there is Laruang Aguinaldo, where Toys ‘R’ Us and Long Live Play PH sell toys that customers can purchase and donate to UNICEF and Kids for Kids. Vertis North will also host Simbang Gabi masses nightly at 7 p.m. from Dec. 15 to 23, at Level 2 of the mall. Over at the ABS-CBN Vertis Tent a series of events will be held this month including the Manila 2018 Throwdown Team Edition Finals on Dec. 9 and the Urban Sale of the Vans Group from Dec. 16 to 19.

How PSEi member stocks performed — December 3, 2018

Here’s a quick glance at how PSEi stocks fared on Monday, December 3, 2018.

 
Philippine Stock Exchange’s most active stocks by value turnover — December 3, 2018

House passes three tax measures on 3rd reading

THE House of Representatives on Monday approved on third and final reading measures increasing excise tax on alcohol and tobacco products and simplifying taxes on financial products.
With 187 affirmative votes, seven negative votes and one abstention, House Bill No. 8677 which proposed to increase excise tax on tobacco products anew to raise revenue as well as discourage consumption, was passed by the chamber.
The bill proposed to increase excise tax on tobacco products by P2.50 annually until it reaches P45 per pack in 2022, and by 4% annually thereafter. It was provided that excise tax on cigarettes will increase to P37.50 from P35 in July 2019; P40 in July 2022; P42.50 in July 2021; and P45 in July 2022.
The Tax Reform for Acceleration and Inclusion (TRAIN) law had increased the excise tax on cigarettes to P32.50 from P30 in January.
The measure is intended to “raise additional revenue to fund the Universal Health Care (UHC) program of the government,” as stated in the bill’s Committee Report. Its counterpart measures, Senate Bills 1599 and 1605, meanwhile, remain pending at the committee level.
Also on Monday, the chamber voted 189-7 to approve on third reading the measure increasing excise tax imposed on alcohol products.
The tax measures on alcohol and tobacco products form part of the Package 2 plus of the comprehensive tax reform program (CTRP).
House Bill No. 8618 proposed to increase excise tax on distilled spirits to 22% from 20% ad valorem tax on the net retail price (NRP) per proof and a specific tax rate of P30 per liter from P23.40 in 2019. The specific tax rate will then be increased by P5 every year, until it reaches P45 in 2022, to increase by 7% annually beginning 2023.
The measure will also levy on sparkling wines a 15% ad valorem tax per liter, which is not imposed in the present system; in addition to a P650 specific tax per liter in 2019, which shall increase by 7% year annually. Currently, sparkling wines are taxed according to price: P316 per liter on sparkling wines costing P500 or less per 750 ml bottle; and P885.7 per liter on bottles costing over P500.
Still wines and carbonated wines with more than 14% alcohol will be taxed at P80 per liter in 2019 with an annual 7% increase thereafter. Currently, taxes on still wines with more than 14% alcohol are as follows:

• P75.9 per liter in 2019 for still wines with 14% to 25% alcohol per liter.

• P23.4 per liter in 2019 for fortified wines or still wines with more than 25% alcohol per liter.

For fermented liquors, the excise tax will increase to P28 per liter from P25.40 in 2019. The specific tax rate will increase to P32 in 2020; P34 in 2021; and P36 in 2022, and will increase by 7% every year beginning 2023.
House Bill No. 8645, or the proposed Passive Income and Financial Intermediary Taxation Act, likewise passed on final reading with a vote of 190-7.
House Bill No. 8645, among others proposed to impose a unified 15% income tax rate on interest, dividend, and capital gains from the current zero to 30% range.
The measure also provides for the following:

• a 5% tax rate on gross receipts from the current 0-7%, removing distinctions according to the security type, nature and maturity;

• standardizes at 0.75% the documentary stamp tax (DST) rate from the current 0-1% on the sale of original issue shares of stock, bonds, debentures, certificates of stock or certificates of indebtedness issued in any foreign country;

• removes DST on sales, agreement to sell, memoranda of sales, delivery or transfer of shares or certificates of stock. — Charmaine A. Tadalan

SRA considering sugar SRP of P50/kg

THE Sugar Regulatory Administration (SRA) will seek the suggested retail price (SRP) on sugar of around P50 per kilo.
In a briefing in Manila, Emiliano Bernardino L. Yulo, said: “We’re being unfairly blamed for prices. We keep hearing the producers keep on making a lot of money.”
“We are calling on the DTI (Department of Trade and Industry). If we need to consult DA (Department of Agriculture), we’ll make the necessary representations,” Mr. Yulo said.
According to Mr. Yulo, consultations will help determine an ideal SRP.
“I think the sugar industry would have its own initiative. We’re bringing down the price of sugar to around P50 level in a few days,” Mr. Yulo said, noting that P50 per kilo is a reasonable price for consumers.
Sugar prices are currently at around P60 to P65 per kilo in supermarkets.
Roberto C. Amores, president of the Philippine Food Processors and Exporters Organization Inc (Philfoodex) and chair of the Philippine Chamber of Commerce and Industry (PCCI) agriculture committee, said that P50 is very far from the 50-kilo bag price of about P1,400.
“The SRA’s proposed SRP of P50 per kilo at retail is wrong,” he said, noting that the 50-kilo bag price is P1,400, or about P28 per kilo.
Mr. Amores added during the Tapatan sa Aristocrat Forum that the shortfall in 2019 is projected at one million metric tons (MT). Philfoodex and PCCI have jointly asked the SRA to allow the importation of 100,000 MT of sugar for food processing.
“If the 100,000 MT import request for food processing is denied, all the products using sugar will become more expensive,” Mr. Amores said.
Mr. Amores said that Philfoodex and PCCI requested letter sent to SRA for the request for importation was around a month and a half ago, of which they were not able to receive any response.
“We’re waiting for the technical study that would justify the need to be competitive. As soon as the technical study is out, we will use it as the basis in compelling SRA and the government in particular to allow the importation of this very important commodity. If not, we cannot really be competitive,” Mr. Amores said.
According to him, the technical study being conducted by Philfoodex and PCCI covers the needs of the sugar industry, including support for farmers, and the impact on prices in the absence of imports.
“(Production) is expected to fall further by another 5.6% in 2019 and because of this shortfall… prices will increase,” Mr. Amores said. — Reicelene Joy N. Ignacio

Jan. hearings for FiT rates of biomass, river hydro

THE Energy Regulatory Commission (ERC) has moved to January next year the hearing for the proposed new rates scheme for run-of-river hydro-electric and biomass projects as sought by the National Renewable Energy Board (NREB).
Under the proposed extension, the board sought a rate of P5.8705 per kilowatt-hour (kWh) for small hydro projects and P6.5969 per kWh for biomass projects. The hearing and public consultation for the extended FiT scheme was previously set last month.
In its order, the ERC directed NREB to “put in plain words and explain, for the benefit of the consumers and other concerned parties, what the proposal is all about and the reasons and justifications being cited in support thereof.”
The ERC scheduled the hearing on Jan. 11, but told interested parties to submit their comments on the proposed rule-making on or before Jan. 7 both in soft and hard copies to the commission’s docket section. Public consultations have also been scheduled in Cebu City on Jan. 17, and in Davao City on Jan. 18.
The proposed rates are the degressed values from the July 27, 2012 feed-in tariff rates issued by the ERC, which set run-of-river hydropower at P5.90 per kWh and biomass at P6.63 per kWh. The implementation of the FiT system started on Jan. 1, 2015 and was to remain in effect for two years, or until December 2017.
The FiT scheme was meant to encourage investment in renewable energy by granting the preferential rates until the capacity installation target of 250 megawatts (MW) set by the Department of Energy (DoE) have been fully subscribed.
The rates, which are subject to degression as may be approved by the ERC, had been reduced to P5.8705 per kWh for run-of-river hydro and P6.5969 for biomass for projects that reached their commercial operate date within January to December 2017.
On Feb. 23, 2018, the DoE informed the ERC of its resolution extending the FiT for biomass and small hydro for another two years, or until Dec. 31, 2019, or upon successful commissioning of projects covering the remaining balance of their respective installation targets, whichever comes first.
Based on the letter from the DoE, the total capacities of both biomass and small hydro plants built and commissioned or to be commissioned within 2017 have neither exceeded nor reached the 250-MW installation targets. Small hydro had a balance of 215.40 MW while biomass had 111.39 MW remaining.
The DoE recommended that the FiT rate to be granted should be the rate at the time of the successful commissioning of the projects. The ERC initiated its own review and re-adjustment of the FiT rules as prompted by the missed installation targets.
On March 26, the ERC directed NREB to submit its proposal or recommendation on the review of existing feed-in tariff. On Aug. 22, the board endorsed the submissions of Philhydro Associations, Inc. and Biomass Renewable Energy Alliance on the rates, which are the ERC-approved rates of P5.8705 per kWh for small hydro and P6.5969 per kWh for biomass. — Victor V. Saulon

Tax relief scheme questioned in student fare discount bills

THE House Committee on Transportation’s Monday discussions on student fare discounts continued with resource persons calling the tax relief scheme for transport operators unworkable.
The technical working group, led by Committee chair Cesar V. Sarmiento of Catanduanes, tackled nine bills, proposing a 15 to 20% discount to students on regular fares on all modes of transportation.
“We have to thresh out the issues, in order for us to come up with a substituted and consolidated bill that will embody all the concerns we wish to address,” Mr. Sarmiento said in his opening statement.
He noted that the committee plans to approve the Substitute Bill on Wednesday. Its counterpart version, Senate Bill 1597, has been approved on third reading.
Among the contentious provisions discussed by the panel was the grant of a tax deduction to transportation utilities.
“We were informed that in the Committee Report, there was a particular provision pertaining to tax deductions, but when it was approved in the Senate, this particular provision was taken out,” he said.
House Bills 8318, 7269, and 8397 all provide for tax relief claimable by transportation utilities against the discounts granted, which the Department of Finance (DoF) proposed to have removed.
Doubts were raised over “the administrative feasibility of these tax deductions” by a Finance Department official, Director Juvy C. Danofrata. “Before you can claim any tax deduction or credit to the BIR (Bureau of Internal Revenue), you must be able to present evidence or proof that it’s really the students who were granted discounts.”
She noted that presenting proof, such as the issuance of an official receipt (OR), would be particularly difficult for jeepney drivers.
Ms. Danofrata also noted that government is expected to forego up to P2.4 billion in taxes from jeepneys fare discounts alone.
“Our range of assumptions puts the revenue loss at between P0.5 billion and P2.4 billion from jeepney fares,” Ms. Danofrata said.
Land Transportation Franchising and Regulatory Board (LTFRB) member and lawyer Aileen Lourdes A. Lizada proposed that the tax deduction be applied to public utility vehicles capable of issuing official receipts while others may be granted separate forms of assistance. — Charmaine A. Tadalan

Gov’t debt up 10.2% year-on-year at end of October

THE national government’s outstanding debt totaled P7.17 trillion at the end of October, up 10.24% from a year earlier amid an increase in the issuance of government securities, the Bureau of the Treasury (BTr) said.
End-October debt grew by 0.10% from the previous month.
The total is equivalent to 97.82% of the projected P7.33 trillion in outstanding debt at the end of 2018.
Of the debt stock at the end of October, 64.45% or P4.62 trillion was borrowed from domestic sources, up 9.59% from a year earlier. The total was up 0.71% from the previous month.
“For the month, the registered increase in domestic debt was due to the net issuance of government securities amounting to P32.74 billion. This was slightly offset by the appreciation of the peso that decreased the value of onshore dollar bonds by P0.29 billion,” the BTr said.
The peso strengthened to P53.527 to the dollar at the end of October, from P54.102 a month earlier.
Some 35.54% or P2.55 trillion of the total outstanding debt was owed to external lenders, up 11.45% from a year earlier, and down 0.98% from September.
“The decline in external debt level was principally due to the P27.34 billion impact of the stronger peso and net repayment on foreign obligations amounting to P0.33 billion. This was tempered by the net appreciation of third-currency denominated external debt amounting to P2.52 billion,” the BTr said.
The government borrows from domestic and foreign sources to fund its budget deficit, which for this year is capped at 3% of gross domestic product (GDP).
This year, the government has raised the target share of foreign debt to 35% from 20% in 2017 to take advantage of favorable interest rates.
The government expects the debt as a share of the economy to decline to 38.6% by 2022 after coming in at 42.6% in the first quarter. — Elijah Joseph C. Tubayan

Gordon proposes Congressional power to inspect bank accounts

SENATOR Richard J. Gordon on Monday said he intends to propose amendments to Republic Act No. 9160 or the Anti-Money Laundering Act (AMLA) that will allow the legislative branch, when conducting congressional investigations, to look into bank accounts through the Anti-Money Laundering Council (AMLC) without needing a court order.
“I intend to amend also the law on AMLA on congressional investigation. AMLA must give cooperation to the Blue Ribbon committee… That will be an amendment,” he said during a Senate hearing on the shipment of illegal drugs.
“When it comes to congressional investigation, like (the Senate) Blue Ribbon, they shouldn’t need to get a court order. What (the committee) needs to know should be released continuously and promptly,” he later told reporters after the hearing.
Under the AMLA, the AMLC is authorized to inquire into or examine bank deposits as long as there is a court order and probable cause has been established that the deposits involved were related to a money laundering offense.
Meanwhile, Republic Act No. 1405 or the bank secrecy law ensures the confidentiality of bank records and provides that it can only be looked into either with the consent of the depositor or with a court order.
Mr. Gordon’s plans to amend the law were prompted by the Senate Blue Ribbon’s investigation into the shipment of P11 billion worth illegal drugs that slipped past the Bureau of Customs (BoC) in August.
The Senate Blue Ribbon committee, which the senator chairs, has been requesting Banco De Oro (BDO) and the AMLC for information into the bank records of persons involved in the alleged smuggling of drugs.
In the previous hearing, Mr. Gordon expressed his frustration to the AMLC over the agency’s failure to respond to the requests of the Senate Blue Ribbon committee and the Philippine Drug Enforcement Agency (PDEA) for the bank records of persons linked to drug smuggling. The AMLC submitted its report to the Senate committee on Monday.
Mr. Gordon also noted during the hearing the practice among Chinese nationals of allegedly opening bank accounts using fake alien certificates of registration (ACRs). The ACR, issued by the Bureau of Immigration (BI), is among the requirements needed by foreigners when opening bank accounts in the Philippines.
“I am aware of a racket going on right now where Chinese folks are opening bank accounts, arranged by agents who have ACRs, alien certificates of registration, and the banks are cooperating to open accounts without knowing their customer,” he said.
AMLC Executive Director Mel Georgie B. Racela said the agency has issued an advisory on the matter.
“As a matter of fact, we have issued an advisory on those activities where account holders are being used and other Filipinos are used to open bank accounts. It’s more of borrowing the account,” Mr. Racela said.
Mr. Gordon said he also plans to open an inquiry into the issue as well. — Camille A. Aguinaldo

Senate passes resolution to extend availability of maintenance, capital funds

THE Senate on Monday approved a joint resolution extending the availability of the 2018 appropriations for the government’s maintenance and other operating expenses (MOOE) and capital outlays (CO) until the end of 2019.
Senate Joint Resolution No. 17 was filed by Senator Loren Legarda, chair of the Senate committee on finance, on Nov. 26, the same day its counterpart version in the House of Representatives was approved.
The joint resolution amends Section 61 of the Republic Act No. 10964 or the 2018 General Appropriations Act (GAA) to allow the validity of the MOOE and CO appropriations for another fiscal year or until Dec. 31, 2019.
The 2018 GAA limited the release of the MOOE and CO funds to within the year. If unspent, the funds will automatically be returned to the General Fund.
The joint resolution states that some of the 2018 MOOE and CO appropriations have not yet been released and obligated with only a month before the end of the year. It noted that this was not the case with the GAA from 2014 to 2017, which allowed for the said funds to be released and obligated for a two-year period.
Under the joint resolution, the unexpended appropriations may be used to fund relief and rehabilitation projects in several regions in Luzon and Mindanao, which were recently devastated by typhoons and flooding incidents.
It could also be used to fund priority projects as well as “the maintenance, construction and rehabilitation of schools, hospitals, roads, bridges, and other essential facilities of the national government,” the document added.
Congress has made the same plea through passing joint resolutions back in 2002 and 2013 seeking to extend the availability of the appropriations for another year. — Camille A. Aguinaldo

HMO premiums remain tax-free

Christmas is definitely here! As an early Christmas blessing to employees, the premium on group health insurance now reverts to being a non-taxable benefit and compensation.
By virtue of Revenue Memorandum Circular (RMC) No. 96-2018, the provision in the previously issued RMC No. 50-2018 stating that group health insurance premiums are taxable as compensation was deleted. Hence, we now apply status quo ante on the treatment of HMO premiums.
Prior to RMC No. 50-2018, the cost of premiums borne by the employer for the group insurance of their employees was exempt from fringe benefits tax and compensation tax. The exemption from fringe benefits tax was specifically provided under Revenue Regulations No. 3-98 and confirmed by Bureau of Internal Revenue (BIR) rulings. The compensation tax exemptions were held in various rulings issued by the BIR. In BIR Ruling DA-081-03, the BIR held that “where the employer decides to buy medical insurance for its employees, whether rank and file or supervisory, and their dependents, the insurance premiums paid by the employer shall be excluded from gross income and therefore not subject to withholding tax.” In BIR Ruling DA-139-05, the BIR reiterated the said ruling and held that “the premium payments made by the corporate employers for the benefit of its eligible employees (managerial and rank-and-file) are not subject to withholding tax on compensation nor to fringe benefits tax.”
The interpretation of both rulings was confirmed by the BIR during tax audits. In most cases, the audit findings include a difference in the amount of salaries and benefits claimed as expense vis-à-vis the amount reported in the alphalist and subjected to withholding tax. If the difference pertains to the amount of group health insurance premiums paid by the employer for its employees, the BIR examiners usually cancel the assessment for such item.
Many employees and other stakeholders were outraged by the inclusion of HMO premiums as taxable benefits. The inclusion resulted in additional tax burdens on many employees who were already receiving more than the P90,000 tax-exempt bonus.
Employees denounced the taxation of HMO premiums, saying that the new TRAIN Law — which was the basis of RMC No. 50-2018 — never stated that HMO premiums are taxable. They also argued that HMO premiums are benefits given for the convenience of employers, and that there was no constructive receipt of income on the part of employees.
Employers, on the other hand, also expressed their opposition to the taxation of HMO premiums on the basis that it was very difficult to implement on a per-employee basis. Employers would generally pay the premiums on group insurance. The changing composition of the group due to resignation, hiring, firing or promotion makes the identification of the specific premium per employee very difficult.
It is laudable that our tax authorities listened to the sentiments of many employee and employer groups. By deleting the controversial provision in the RMC imposing tax on health insurance premiums paid by employers for their employees, the BIR definitely made this a season of cheer and goodwill. With only several days before Christmas, this news is truly a great gift.
It is indeed a merrier Christmas with the HMO premium not being taxable. As we celebrate this much-awaited season, let us all be thankful and count our blessings. I wish you all a happy, merry, and stress-free holiday season. Merry Christmas to all!
 
Maricel P. Katigbak is a manager of the Tax Advisory and Compliance of P&A Grant Thornton. P&A Grant Thornton is one of the leading audit, tax, advisory, and outsourcing services firms in the Philippines.
Acel.Katigbak@ph.gt.com
+63(2) 988-2288.

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