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More tax credits from textile industry rejected

REUTERS

THE Commission on Audit (CoA) has disallowed more tax credit certificates (TCCs) issued to textile companies worth a combined P3.83 billion, the Department of Finance (DoF) said in a statement on Monday.

According to a CoA report made to the DoF, the textile companies that illegally obtained TCCs from the One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center (OSS) were Silvertex Weaving Corp., Knitech Manufacturing, Inc., Capital-Roll Knit Corp., Uni-Glory’s Knitting Corp., Primeknit Manufacturing Corp., Tai-Cheng Integrated Resource, Inc., Miskhu Industrial Corp., and Universal Pacific Knitting Mills, Inc.

As of the end of 2021, previous notices of disallowance issued by CoA’s Special Audits Office to the textile industry had totaled P3.41 billion.

These tax-credit certificates were illegally granted between 2008 and 2014.

Tax credit certificates, as authorized by Executive Order 226, are typically given to exporters registered with the Board of Investments (BoI). Through these certificates, exporters can obtain refunds on taxes paid on raw materials by offsetting the tax credits against other taxes due.

DoF, BoI, Bureau of Customs and the OSS were found to have improperly issued TCCs to ghost exporters, or to companies that were not entitled to the tax credits.

The OSS is managed by the DoF, the Bureau of Internal Revenue, and the BoI. — Tobias Jared Tomas

BPOs say coordinated gov’t effort needed to keep talent development up to speed

PIXABAY

THE development of talent is critical to the competitiveness of the information technology-business process management (IT-BPM) sector, and will require a coordinated effort from government agencies responsible for developing worker skills, an industry association official said.

Ana Maria S. Bongato, IT and Business Process Association of the Philippines former executive director of talent development, said the pace of change has become more rapid since the pandemic, making skills development more and more crucial.

“We have to work faster and together… companies must continue to intervene to prepare new hires for actual work to be done. (The) quality of talent needs to be addressed for us to be competitive,” Ms. Bongato said during a May 13 forum with members of the industry, also known as the business process outsourcing (BPO) industry.  

Citing the findings of the National Skills Mapping Survey for the IT-BPM industry, Ms. Bongato said the preparedness of graduates for work in animation, game development, software, and health information management is low.

She added that the survey indicates that smaller companies do not have the resources to partner with academic institutions to improve curriculum development or offer internships.

“Deliberate effort by government agencies is crucial to working as one in developing surveys and programs that would help the various sectors. Soft skills continue to be one of the main concerns of the sectors, which include communication, work ethic, problem-solving, and critical thinking,” Ms. Bongato said.

“Government agencies working with the sectors should have a consolidated effort, so that more coordinated programs may be developed from planning to execution and review. Streamlining government agencies’ efforts in working with the sectors will result in more coordinated programs that may be developed from planning to execution and review and evaluation,” she said.

The National Skills Mapping survey was launched in November 2021 and ended in January. Its objective was to determine the skills requirements of the IT-BPM industry and evaluate university course offerings. The study was organized by the Board of Investments and the Commission on Higher Education (CHED).

The survey recommended courses such as a Bachelor of Science in entertainment and multimedia computing for animation and game development, and BS courses in business and information technology specializing in service management. The Healthcare Information Management Association of the Philippines, Technical Education and Skills Development Authority and Department of Information and Communications Technology also recommended offering nursing informatics as a subject.

CHED Director Cherrie Melanie Ancheta-Diego said the study opened up many possible courses of action, calling it a “spark of our continuing conversation” with the industry. — Revin Mikhael D. Ochave

Tax court declines to review ruling in favor of IT firm

THE Court of Tax Appeals (CTA) has declined a tax bureau appeal to review a division ruling partially cancelling the tax liabilities of Izone Technologies Philippines dating back to 2008.

In a 31-page decision on May 5, the CTA, sitting en banc, affirmed its First Division’s ruling that the demand being made on Izone had exceeded the three-year prescription period.

The tax court also varied the Commissioner on Internal Revenue (CIR) from collecting any deficiency taxes assessed in 2008 against Izone.

“Internal revenue taxes shall be assessed within three years after the last day prescribed by law for the filing of the return, and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period,” according to a copy of the ruling written by CTA Associate Justice Jean Marie A. Bacorro-Villena.

The tax court’s Special First Division earlier canceled the Bureau of Internal Revenue (BIR) Fringe Benefits Tax (FBT) assessment on the company, which amounted to P195,199.14, but upheld its assessment of Expanded Withholding Tax (EWT) and Documentary Stamp Tax (DST) for the same year. It ordered the company to pay the BIR P2.5 million in EWT and DST liabilities for 2008, inclusive of penalties and interest.

The division ruling earlier ruled that the last day for the CIR to issue the FBT assessment was April 10, 2011. The company received the assessment a year beyond that date.

“Accordingly, we find no cogent reason to reverse the cancellation of petitioner’s (CIR) deficiency FBT assessment against the respondent (Izone Technologies Philippines),” the court ruled. — John Victor D. Ordoñez

April wholesale price growth in NCR building materials highest in over a decade

PHILIPPINE STAR/MICHAEL VARCAS

WHOLESALE PRICE growth in building materials in Metro Manila was at its highest level in over a decade in April as construction activity picked up as quarantine restrictions eased.

According to preliminary data from the Philippine Statistics Authority, the construction materials wholesale price index (CMWPI) for the National Capital Region (NCR) rose by 6.9% in April, accelerating from 6.6% in March and 2.4% a year earlier.

The April estimate matched the 6.9% reading posted in January 2012, making it the highest in 124 months. The high before that was 8.3% in December 2011.

In the year to date, Metro Manila’s CMWPI averaged 6%, against the year-earlier rate of 1.9%.

“Rising demand for construction materials due to the reopening of the economy and resumption of economic activities alongside supply constraints is pushing prices of building materials to increase,” Asian Institute of Management Economist John Paolo R. Rivera said in a text message.

April was the second month the capital and surrounding areas were observing Alert Level 1, the most permissive quarantine setting for coronavirus disease 2019 (COVID-19).

Price growth in reinforcing and structural steel prices was 11.2% in April (up from 10.5% in March). The corresponding movement in prices in fuels and lubricants was 41.7%, from 36.3% a month earlier.

“There is demand for such materials because they are the basic materials required by developers. The supply constraints due to the war and persistence of the pandemic contributes (are behind the) price increases,” Mr. Rivera said.

Other commodities posting price growth were sand and gravel, (2.7% in April from 2.5% in March); hardware (4.6% from 3.5%); lumber (3.8% from 3.1%); doors, jambs, and steel casements (1.9% from 1.4%); plumbing fixtures and accessories/waterworks (8.0% from 7.4%); and painting works (4.7% from 4.5%).

Slower growth was noted in plywood (4.4% from 4.5%); electrical works (9.5% from 10%); and PVC pipes (3.8% from 5.3%).

Price growth in the remaining categories was unchanged at the following levels: concrete products and cement (4.8%); G.I. sheets (13.5%); glass and glass products (1.4%).

Mr. Rivera said CMWPI in the coming months will be driven by developments in the global markets for construction supplies, particularly if supply-chain disruptions ease. — Ana Olivia A. Tirona

What to expect on taxes from the next administration

Last week, we voted for the leaders we wanted to run the country. Soon, the next administration will be sworn into office, and taxpayers are looking for definitive guidance on taxation to be issued by our next set of leaders and legislators.

Taxation has evolved with the ebb and flow of governments. The National Internal Revenue Code or the Tax Reform Act of 1997 superseded the 1977 Tax Code. Electronic filings were also introduced, including the Electronic Filing and Payment System (eFPS), the eBIRForms System, and electronic certificates authorizing registration (eCAR), among others. We are currently in the middle of streamlining the BIR’s registration processes and other taxpayer transactions. Significant tax reform laws have been passed, including the Tax Reform for Acceleration and Inclusion (TRAIN) Law and the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.

With new leadership coming on board very soon, what are on the wishlists of the taxpayers? Here is what we think taxpayers will be most looking forward to:

PACKAGES 3 AND 4 OF THE COMPREHENsIVE TAX REFORM PROGRAM (CTRP)
Packages 3 and 4 of the CTRP are currently being deliberated in the senate. Package 3 focuses on the standardization of the real property valuation and assessment system to establish benchmarks and to regulate tax rates and assessment levels. On the other hand, Package 4 focuses on the simplification of the taxes on passive income, with a view towards increasing capital mobility and financial inclusion.

Packages 3 and 4 may still be passed until June 30, but if these may still be handed off to the next administration.

BROADER TAX AMNESTY PROGRAM
So far, we have had the estate tax amnesty law, which provided a simpler process for settling estate tax due that remain unpaid or which have accrued as of Dec. 31, 2017. In this regard, the filing of the Estate Tax Amnesty Return and payment estate tax due must be made not later than June 14, 2023.

There was also an amnesty on delinquent accounts, covering taxes due arising from BIR audits in which the tax assessment has become final and executory. This amnesty was made available until June 30, 2021.

How about a wider tax amnesty program to include other tax types, allowing taxpayers a clean slate? Some relief on past tax obligations would be welcome, freeing up taxpayers to focus their efforts on growing their businesses. A general tax amnesty could again be on the cards, balancing the interests of taxpayers and the government.   

INTEREST ON DELAYED TAX REFUNDS
As we know, when taxes are owed to the government, and if there is a delay in making such payments, the government charges 12% interest. However, when a taxpayer is entitled to a tax refund, delayed refunds do not expose the government to interest payments.

In the worst-case scenario, an application for tax refunds may end up not acted upon, leaving taxpayers no recourse other than to elevate the application to the courts. Even if the taxpayer wins, the time it takes to reach a court ruling could be substantial, tying the taxpayer’s funds up for years.

Other jurisdictions allow interest on delayed tax refunds. The next administration could look into this to improve perceptions of the tax system’s basic fairness.

STREAMLINED TAX PROCESSES, EFFICIENT AUDITS
The Bureau of Internal Revenue (BIR) continues to streamline its processes for the sake of simplicity and efficiency. The BIR could explore other areas to streamline, either by further reducing filing requirements or the time given to the BIR to act on pending transactions.

Taxpayers are also hoping for BIR audits to be completed faster. There is a common impression that some tax audits are based on pure conjecture, with the bureau acting on mere comparisons of accounts that are sometimes unrelated. These instances sometimes generate preposterously large tax assessments in the initial findings. Perhaps tax audit methods could be revisited to make the process more efficient.

Taxpayers could be wanting more with the entry of the next administration. But whatever the new government ends up doing, continued reform and improvements to the tax system are definitely among the expectations.

Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.

 

Mark Ebenezer A. Bernardo is an associate of Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

New senators may be proclaimed this week, Comelec says

BW FILE PHOTO

THE 12 winning senatorial candidates may be proclaimed by Wednesday afternoon, while some party-list winners may be announced a day later, according to an election commissioner.

“Our plan is to proclaim this Wednesday afternoon the 12 winning senators,” Election Commissioner George Erwin M. Garcia told a televised news briefing in Filipino on Monday. “On Thursday Afternoon, we are hoping to proclaim some party-list candidates who have guaranteed seats.”

As of Monday noon, the Commission on Elections (Comelec) as the National Board of Canvassers had counted 159 of 173 certificates of canvass, or about 91%  of the total, he said.

The Comelec full court has to validate 14 certificates, 11 of which are manual overseas ballots that take longer to deliver. Mr. Garcia separately told reporters in a Viber message election results from Hong Kong were expected to arrive by 4:00 pm on Monday.

Comelec would probably proceed with the proclamation despite the upcoming special elections in Lanao del Sur since the results from the region were unlikely to affect the outcome, he said.

Last week, Comelec said it would hold special elections in some areas in the southern Philippine province after a failure of elections was declared in several municipalities due to violence and irregularities.

Mr. Garcia said Comelec would continue the vote canvassing even after proclaiming the winners so that votes would not be left out regardless of their impact on the official tally.

The proclamation ceremony would be held at the Philippine International Convention Center in Pasay City, Comelec spokesman John Rex C. Laudiangco told a separate briefing.

He earlier said Comelec would hold the elections in Lanao de Sur on May 24. He said each winning senator may bring as many as five companions to the event, while party-list groups are allowed two representatives. 

Meanwhile, the Senate had received 74% or 128 of 173 election certificates and returns for president and vice-president as of Monday morning, it said in a statement.

It took delivery of local certificates and returns from the provinces of Quezon, Isabela, Mountain Province, Lapu-Lapu City, Davao del Norte, General Santos City, Sultan Kudarat and North Cotabato. Overseas absentee voting certificates from India, Lebanon and Italy have also arrived.

The Senate and House of Representatives are expected to convene in a joint session on May 24 to canvass the votes for the 2022 presidential and vice-presidential elections.

Senate President Vicente C. Sotto III has said the new president and vice-president could be proclaimed by May 27 or 28. — John Victor D. Ordoñez and A.N. O. Tan

House supermajority expected as Marcos cousin meets more powerbrokers 

PHILIPPINE STAR/ MICHAEL VARCAS

LEYTE Representative Martin G. Romualdez, cousin of presumptive president Ferdinand “Bongbong” R. Marcos, Jr., continues to meet with leaders of mainstream political parties as he is now poised to assume the speakership of the House of Representatives in the incoming 19th Congress.   

Mr. Romualdez on Monday afternoon met with stalwarts of Nacionalista Party (NP), including presumptive senator Mark A. Villar and Las Piñas City Rep. Camille A. Villar.  

Their parents, former senator and business tycoon Manuel B. Villar and Senator Cynthia A. Villar, are leaders of the conservative party, which has a membership of 39 in the lower chamber.   

The meeting, which was aimed to formalize NP’s endorsement of Mr. Romualdez’s speakership bid, was also attended by Ferdinand Alexander “Sandro” A. Marcos III, son of Mr. Marcos, Jr.   

Mr. Romualdez’s aspired position is now backed by eight mainstream political parties, including the political group chaired by Vice President Maria Leonor “Leni” G. Robredo.  

With the backing of the country’s largest traditional parties, the House would be “on solid ground in promoting the unity agenda” of the incoming Marcos administration, Mr. Romualdez’s office said in a press release.  

“We will work as one in pursuing this agenda and putting in place measures that would get us out of the COVID-19 (coronavirus disease 2019) pandemic and those that would sustain our nascent economic growth,” he was quoted as saying.   

More than 200 of around 300 members of the House of Representatives have endorsed the speakership bid of Mr. Romualdez of Lakas-CMD as of Saturday, according to his camp.   

Mr. Romualdez has also received the endorsement of his partymate, former President Gloria M. Arroyo, chair emeritus of Lakas-CMD. The rightist group is now chaired by presumptive vice president Sara Duterte-Carpio.  

Ms. Arroyo is also returning to the House after running unopposed as representative of Pampanga.   

Arjan P. Aguirre, who teaches political science at the Ateneo De Manila University, said the emerging supermajority in Congress would be “full of tensions” given that the supposed unity among its members is not anchored on principles and platforms.   

“In this situation, expect that the emerging ‘supermajority’ will be full of tensions since not all groups and forces have the same worth and roles to the ruling coalition,” he said in a Messenger chat. “These groups will continue to strengthen their position by activating their factional resources.”   

Mr. Aguirre said members of the emerging pro-administration faction are expected to “compete for a higher place or more favored position in legislative portfolios and committees.”  

“Some will resort to promising the prioritization of the agenda of the ruling coalition, others will offer support or sponsorship of personal bills of the leading clique of the coalition.” — Kyle Aristophere T. Atienza 

Incoming gov’t needs to raise P326-B new annual revenue to cover COVID-related debts 

THE INCOMING Philippine government needs to raise about P326 billion in new revenues annually to pay for debts incurred for the coronavirus response, according to the House Ways and Means Committee chairman.  

“If you annuitize the debt service due to deficit spending from Jan. 2020 to March 2022, you will have around P144 billion in principal payments over the next twenty years, and around P181 billion in interest payments,” Albay Representative Jose Ma. Clemente S. Salceda said on Monday. 

“That will of course vary per year, and some years will need lower debt than others. But if you want to stretch out the payment schedule, that’s the kind of fiscal space you need to cover the COVID-19 debts without incurring budget cuts,” he said.    

Mr. Salceda said presumptive president Ferdinand “Bongbong” R. Marcos, who won the “biggest election victory since 1961,” must use his political capital to immediately roll out effective fiscal measures within his first 100 days in office.   

These measures include new packages of tax policy reforms, setting up a digital taxation service, and overall improvement in tax payment procedures, among others.    

Mr. Marcos “can use his supermajority in both mandate and Congressional alliances to enact smart, efficient tax and economic policies to address this debt overhang,” the Albay representative said.   

The earlier the next administration begins with the fiscal expansion program, the better it will be for investor confidence, the country’s credit ratings, debt overhang and future growth prospects, the solon said. — Alyssa Nicole O. Tan 

Duterte signs law granting night pay to gov’t workers 

A mural in Paco, Manila is seen on May 16, 2022. — PHILIPPINE STAR/KRIZ JOHN ROSALES

PRESIDENT Rodrigo R. Duterte has signed into law a measure granting night shift differential pay to government employees, including those working in government-owned corporations.  

The law, signed on April 13, provides a rate not exceeding 20% of the hourly basic rate of an employee for each hour of work performed between 6 p.m. and 6 a.m. the following day.  

It covers government workers occupying position items from division chief and below, or their equivalent, whether they are permanent, contractual, temporary, or casual employees.   

Government workers whose office hours are within 6 a.m. to 6 p.m. are excluded, but will be given overtime pay if they work beyond the regular eight-hour schedule. 

The night shift differential pay shall not diminish whatever benefits or allowances government employees are currently receiving, according to the law.  

The night differential pay provided under the law would not cover government workers whose services are required or are on-call 24 hours daily, such as the military, police, firefighters, jail management officers, and other similarly situated as determined by the country’s civil service commission and budget agency.  

Meanwhile, Mr. Duterte also signed a law raising the mandatory retirement age of key officials in the military to up to 60 years old.   

It also modified the term of key officers of the Philippine armed forces. — Kyle Aristophere T. Atienza 

Party-list group pushes for special House sessions to address oil price hike 

PHILIPPINE STAR/ RUSSELL A. PALMA

CONGRESS should hold special sessions to address the spike in oil prices, said Anakpawis Party-list on Monday, citing its impact on the livelihood and income of poor sectors such as drivers, fisherfolk and farmers.  

“We urge the incumbent lawmakers to decisively carry out the patriotic act of serving the interests of people: to repeal the excise tax and VAT (value added tax) provisions on oil products; and to totally repeal the Oil Deregulation Law,” Anakpawis National President Ariel B. Casilao said. 

Congress will resume sessions on May 23 to June 3.  

Mr. Casilao called the oil price hikes “baseless” as these do not jibe with the Ukraine crisis and movements in Dubai crude oil prices.  

Oil companies are set to decrease prices on Tuesday, with gasoline by 40 centavos per liter, diesel by P3.10, and kerosene by P2.10.   

He noted that excise tax and VAT imposes an additional cost of P13 to P17 per liter on gasoline and diesel products.  

Mr. Casilao also pushed for local governments to provide P10,000 financial aid to affected sectors to enhance productivity.  

“We appeal to the local governments to take on the noble task of aiding their affected constituents to avoid the catastrophic crisis of displacement and unemployment, and its consequence of worsened poverty and hunger of poor families,” he said. — Alyssa Nicole O. Tan 

More universities join work for Mt. Apo’s UNESCO Geoparks listing 

A MINDANAO White Eye bird is spotted by Sta. Cruz town’s senior tourism officer, Julius R. Paner, during a biodiversity monitoring activity along Mt. Apo’s Sibulan Trail in Davao del Sur in Aug. 2021. — JULIUS R. PANER 

FOUR universities and the National Museum of the Philippines are working together for the profiling of flora and fauna at the Mt. Apo National Park, which will be used to support the goal of having the country’s highest peak listed as a UNESCO Global Geo-Park (UGGp) as well as update conservation programs.  

The data-gathering project is under the Biodiversity in Selected Mountain Ecosystems of Mindanao for Conservation and Sustainable Development program of the Central Mindanao University.   

It is funded by the Department of Science and Technology and being undertaken in partnership with the University of the Philippines-Los Baños, Davao Oriental State University, and Davao Del Sur State College.  

“The gathering of critical data for the said project will not only aid the generation of knowledge for MANP’s (Mt. Apo Natural Park) conservation plans and programs but will also succor its application for recognition as a UNESCO Global Geo-Park (UGGp),” the Environment department’s Davao regional office said in a statement.    

Indigenous peoples in Mt. Apo, particularly the Bagobo Tagabawa communities, are also collaborating in the research program.    

“The partnership shall also act as contribution to the greater body of knowledge for Mountain Ecosystems in Mindanao and the Philippines,” the department said.   

Mt. Apo’s Protected Area Management Board is stepping up efforts this year for the application to the United Nations Education, Scientific and Cultural Organization’s (UNESCO) Global Geoparks, a relatively new label ratified by member states in 2015.  

Global Geoparks “are single, unified geographical areas where sites and landscapes of international geological significance are managed with a holistic concept of protection, education and sustainable development,” according to the UNESCO site.   

There are currently 177 UNESCO Global Geoparks in 46 countries.    

To be listed, a site must have an exceptional geological heritage while its management and conservation programs must involve local stakeholders. There should also be a system for educating visitors.   

Mt. Apo, located in the Philippine southern island of Mindanao, is a dormant startovolcano with an elevation of 2,954 meters above sea level. It serves as a watershed and ecotourism destination. — MSJ 

BCDA, PHL Army renew cooperation for New Clark City security 

THE Bases Conversion and Development Authority (BCDA) and the Philippine Army-7th Infantry Division have renewed their partnership for the security of the New Clark City in Tarlac province.   

BCDA Chief Executive Officer Aristotle B. Batuhan and 7th Infantry Commanding General Andrew D. Costelo signed a memorandum of agreement on May 4 for the continued deployment of paramilitary troops to ensure security within the 9,450-hectare community that is under development.  

“The move paves the way for the unhampered development of the government’s big-ticket projects and private investments in New Clark City, facilitating the inclusive growth of its communities and a business climate primed for continuous commercial activities,” the BCDA said in a statement on Monday.   

“The New Clark City development requires a devoted, dedicated and exclusive group of personnel to be present in the property during the entire duration of the construction and development … BCDA believes that the presence of the AFP (Armed Forces of the Philippines) in the entire area of New Clark City will assure the deterrence of any potential and possible threats to its development,” according to the agreement. — Revin Mikhael D. Ochave  

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