Diokno touts ‘promising economy’ to investors

June 1, 2022 | 8:00 pm

BANGKO SENTRAL ng Pilipinas (BSP) Governor Benjamin E. Diokno, who will be the next government’s Finance Secretary, said the Philippine economy is “promising” and has much to offer potential investors.

“We thank our partners in Spain who have played significant roles in the Philippine economic narrative,” Mr. Diokno said during his presentation to the BBVA Investor Roundtable Discussion in Spain, “Over the years, Spain has been an important ally, contributing to our trade growth.”

“And for those who have yet to do business with the Philippines, we urge you to take a look at our promising economy as we soar to new heights.”

Mr. Diokno said the Philippines is currently in a demographic sweet spot, with a young cohort entering or currently in the work force.

“The country has a younger population compared with the rest of the world. It has a rich talent pool, having an annual average of 750,000 graduates across disciplines, forming a deep manpower pool of 45 million (who are) well-educated and hard-working. In an ageing world, having a population with a median age of 25.7 is an asset,” Mr. Diokno said.

“Moreover, the Philippines’ location is favorable for key markets as it is situated at the heart of major trading routes,” Mr. Diokno said.

“At the height of the pandemic, as I said earlier, we didn’t sit idly by and wait for the virus to recede. Instead, we pushed for game-changing reforms. We continued to invest in physical infrastructure and human capital. All these are meant to improve the Philippines’ competitiveness, boost its productive capacity, and make the Philippines an even more attractive investment destination.”

Mr. Diokno highlighted how the country “successfully managed” the coronavirus disease 2019 (COVID-19) health crisis through structural reforms and macroeconomic management.

“After the pandemic-driven recession in 2020, the economy grew by 5.7% last year and 8.3% in the first quarter this year. We attribute this to much-relaxed mobility and activity restrictions as the country was able to manage the spread of COVID-19,” Mr. Diokno said.

HSBC VIEW ON GROWTH
Separately, the Philippines was identified as a strong market for future growth, HSBC Ltd. said, citing the results of a survey.

“Known for its competitive price of labor, the Philippines is expected to attract investment in the years ahead, with US companies playing a leading role. The survey shows that 1 in 5 companies (21%) planned to expand in the country in the next two years, making the Philippines a close second as the most preferred destination for investment in the region,” HSBC said in a statement on Wednesday.

The survey noted that in the absence of a downturn arising from geopolitics or a COVID-19 resurgence, the future is bright for the Philippine market.

“From demographics to digitization to pure dynamism, so much is going in favour of the Philippines as part of Southeast Asia,” HSBC Philippines Head of Wholesesale Banking Mimi Concha said.

“The country is home to a large young population that is digitally native, increasingly affluent and educated, and with growing purchasing power. Their enterprising nature has produced a startup scene that rivals any other in the world. We are indeed brimming with potential,” she added. — Keisha B. Ta-asan

Convenience vs tax savings: Weighing individual tax rate options

June 1, 2022 | 7:59 pm

As prices rise in response to the Ukraine-Russia crisis, Filipinos may be on the lookout for alternative sources of income, which would be an opportunity to engage their entrepreneurial side. Entrepreneurship is in fact abundant in our society — according to the 2020 Micro, Small and Medium Enterprises (MSME) Statistics from the Department of Trade and Industry, some 88.77% of establishments in the Philippines are micro enterprises.

Individuals, whether self-employed or employed by others, are taxed at graduated rates of 0-35% based on net taxable income. Additionally, self-employed individuals (which include professionals) are also subject to business taxes on gross sales/receipts (namely, value-added tax [VAT] or percentage tax).

The TRAIN Law, which we welcomed in 2018, offered an alternative taxation regime for self-employed individuals or mixed-income earners (or those who earn both a salary from employment and income from business or practice of a profession). This alternative is the 8% income tax on gross sales or receipts (otherwise known as gross income tax or GIT) from business or practice of a profession, in excess of P250,000.

For the business income to qualify for the 8% GIT, the individual should meet the following conditions as laid down by Revenue Memorandum Order (RMO) No. 23-2018:

• Gross sales/receipts and other non-operating income should not exceed the VAT threshold of P3,000,000 during the taxable year;

• The taxpayer should be registered as a non-VAT taxpayer; and

• The taxpayer must have signified the intention to elect the 8% GIT upon initial registration or upon filing their quarterly income tax return (ITR) for the first quarter of the taxable year. Such election will be irrevocable for that year.

The 8% GIT is in lieu of the regular income tax and percentage tax. Thus, taxpayers opting for this special rate only need to pay one tax instead of paying income tax and percentage tax separately every quarter. Thus, they only need to file the Quarterly ITR, unless exempted by any revenue issuances and the Annual ITR (Financial Statements are not required to be attached).

In contrast, self-employed individuals who have not opted for the 8% GIT, are generally subject to the 3% percentage tax or 12% VAT. The 3% percentage tax rate is temporarily reduced to 1% until June 30, 2023 under the CREATE Law and reverts to 3% subsequently.

Effectively, opting for the 8% GIT saves a taxpayer from the inconvenience of filing two returns and paying two types of taxes quarterly. As a quick review, ITRs are filed every May 15 (Q1), August 15 (Q2), November 15 (Q3), and April 15 of the following year for the annual return. On the other hand, percentage tax returns are filed 25 days after the close of each taxable quarter.

But what is the cost of this convenience? When is it beneficial to avail of the 8% GIT? Looking at tax costs alone, let’s do the math.

Taking as an example a self-employed individual with no deductible operating expenses, at P3,000,000 gross sales, the taxpayer must pay only P220,000 under the 8% GIT. It is computed by multiplying 8% to P3,000,000 less the P250,000 exempt income.

For the taxpayer to be indifferent about availing of this option, the gross profit rate (or GP rate) given the applicable percentage tax is 1%, should be 33.33% of the gross sales/receipts. It is at this GP rate (8% GIT breakeven point) that tax due under 8% GIT and graduated rates are the same at P220,000. If the GP rate is more than 33.33%, the taxpayer will be better off availing of the 8% GIT. Conversely, if its GP rate is less than 33.33%, it will be worse off applying the 8% GIT. At 40% operating expenses, the 8% GIT breakeven point is a 55.56% GP rate.

From this calculation, we can infer that those individuals with margins greater than the breakeven point are more likely to benefit from the 8% GIT. For individuals with relatively stable and high GP rates and lower operating expenses, 8% GIT may be a good option. It will mean tax savings and less administrative costs on filing returns. However, for those with a low GP rate and who have a significant level of operating expenses, 8% GIT may not be the best option — taxwise. The taxpayer will lose the benefit of deducting his expenses.

Either way, availing of the 8% GIT may save the individual precious time which can be devoted to running the business. Since the irrevocable option is signified during the first quarter, the downside is that there is no turning back. Like all other aspects of the business, careful study is required. By conducting a diligent cost-benefit analysis, taxpayers can evaluate the most efficient tax rates to apply in order to maximize the sought-after returns.

The views or opinions presented in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.

Erika Mae D. Buenaventura is an assistant manager at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of PwC network.

erika.mae.buenaventura@pwc.com

Villar drops bid for Senate leadership

June 1, 2022 | 7:10 pm

SENATOR Cynthia A. Villar has dropped her bid for the upper chamber’s top position, saying she wants a “simple life,” following political jockeying even before the proclamation of the 12 winning legislators in the May 9 elections.

She told reporters in an ambush interview on Wednesday that she is also not considering a term-sharing arrangement with other contenders for the Senate president seat.

“I’d rather not. I want a simple life.”

Instead, the senator seeks to maintain her chairmanship in the Agriculture, Food and Agrarian Reform Committee; and Environment, Natural Resources and Climate Change Committee.

“I’ll take care of my advocacy, agriculture and environment,” she said.

Prior to her announcement, Senator Ronald M. Dela Rosa said eight of the 24 senators for the incoming 19^th Congress, including himself, were backing Ms. Villar’s leadership.

This group, Ms. Villar said, will now be supporting current Senate Majority Leader Juan Miguel “Migz” F. Zubiri, who reportedly already has at least 10 other senators behind him.

Ms. Villar said she has already informed Mr. Zubiri about her decision. “He was very joyful.”

In a statement on Wednesday, Mr. Zubiri said, “A united Senate is a productive one, so from the very beginning, I’ve always wanted to form a supermajority in the Senate… so I would like to thank Ma’am Cynthia Villar from the bottom of my heart for her support, graciousness, and magnanimity in helping me form a supermajority.”

“If I become the next senate president, the Senate will continue to be the Senate of the people, and a Senate where every senator is free to express their own views and beliefs,” he added.

Senator Sherwin T. Gatchalian and incoming Senator Francis Joseph “Chiz” G. Escudero were also said to be gunning for the top post.

MINORITY
Meanwhile, Senators Ana Theresia “Risa” N. Hontiveros-Baraquel and Aquilino Martin “Koko” L. Pimentel III, who are headed to comprise the minority bloc, have reached out to four other senators to join them.

“Well, we hope that at least three, if not more, and as I said before, the most important thing is not the absolute number of the minority, the most important thing is that we are a real minority, no matter how we are — little or more,” Ms. Hontiveros said in a press briefing on Wednesday.

“It is true that we can fulfill the duty to check and balance, to fiscalize, while like the minority today, we are also able to work with the majority in common advocacies,” she added.

Mr. Zubiri also announced on Wednesday a tentative list of chairmanships for the different committees. — Alyssa Nicole O. Tan

Congress ratifies bill creating transportation safety board

June 1, 2022 | 7:10 pm

CONGRESS has ratified the reconciled report of a bill creating the Philippine Transportation Safety Board (PTSB), an agency that will have authority to set and implement policies to ensure safety in the country’s transport sector.

“Mr. President, this measure is long overdue. Versions of the bill have been filed as far back as the 13^th Congress — almost two decades ago,” Senator Mary Grace S. Poe-Llamanzares, the primary sponsor of the bill, said during the plenary on Wednesday.

Under the consolidated measure, the PTSB will be an independent investigatory body covering all transport-related accidents or incidents.

“It is now also a standard-setting agency tasked with evaluating and developing evidence-based safety standards that are at par with international standards,” she said.

The board will consist of seven members, including representatives from the land, rail, air and sea transportation sectors, and from the commuting public.

“This ensures that in addition to experts, commuters will also be given a voice in decisions regarding the tightening of transportation security in our country,” Ms. Poe said.

PTSB board members and employees will not be allowed to hold any other office, employment, profession or business during their tenure.

“PTSB has a crucial and life-saving mandate, and thus the integrity of its board and employees should not in any way be jeopardized or compromised,” said Ms. Poe.

Under the proposed law, the board would be required to report their factual findings — which will be binding and taken judicial notice by the courts — and their conclusions and recommendations, which will not be admissible except in administrative cases, in every investigation.

“This is in line with the universally accepted principle in accident investigation of prioritizing safety by encouraging free and full disclosure,” the senator said.

Ms. Poe said that the passage of the bill “couldn’t be more timely,” noting the “unforgivably high number of transport-related deaths and accidents in recent history.”

She cited that from 2016 to 2020, there were 483 accidents recorded in the maritime sector, while annual average deaths due to road crashes were at 12,487.

“The agency really needs to investigate accidents like this and take steps to prevent it from happening in the future,” Ms. Poe said.

The ratified bill will now be sent to the office of outgoing President Rodrigo R. Duterte for review and approval. — Alyssa Nicole O. Tan

PCOO plan to accredit social media influencers questioned amid proliferation of fake news

June 1, 2022 | 7:09 pm

A MEDIA freedom advocate on Thursday urged the incoming chief of the presidential palace’s communications team to consult the Malacañang Press Corps (MPC) and other sectors on their plan to include social media influencers in press briefings.

Incoming press secretary Rose Beatrix “Trixie” Cruz-Angeles on Wednesday said the accreditation of social media influencers for presidential briefings is among the top priorities of the Presidential Communications Operations Office (PCOO).

“We are pushing for the accreditation of bloggers to be invited to some of the briefings, especially those conducted by the President-elect,” she told a televised news briefing.

Danilo A. Arao, a press freedom advocate and journalism professor at the University of the Philippines, said the PCOO, which serves as a bridge between the Palace and legitimate media, should clarify whether it has consulted the MPC and other sectors like the academe regarding the plan.

The MPC is a group of journalists accredited by the state to cover presidential events.

Mr. Arao also said that the communications office should make public its guidelines on the planned accreditation of bloggers, content creators and influencers.

“Given the toxic media landscape, this is a dangerous proposal given that ‘fake news’ peddling is being perpetrated by certain ‘influencers’ and there is ongoing harassment and intimidation of certain journalists toward ‘de-legitimizing’ them,” Mr. Arao said in a Messenger chat.

Ms. Cruz-Angeles said the Marcos camp would likely “open up discourse” and look at “issues of disinformation that seem to be a hot button topic nowadays.” — Kyle Aristophere T. Atienza

4^th witness retracts allegations against De Lima

June 1, 2022 | 7:08 pm

DeLima-PHILSTAR-FILE — PHILSTAR FILE PHOTO

A FOURTH witness has taken back his allegations against detained Senator Leila M. de Lima, who has been imprisoned since Feb. 2017 on drug trafficking charges.

In a four-page affidavit dated May 24 and sent to reporters on Wednesday, Marcelo L. Adorco said that he was coerced into implicating the senator, one of President Rodrigo R. Duterte’s most outspoken critics, and other individuals in the illegal drug trade.

“The truth is I was only forced to sign my previous affidavit which accused these people of being involved in illegal drugs because I feared for my life and safety,” according to a copy of his statement.

He claimed that a former high-ranking police officer had forced him to sign affidavits in 2016 and 2017, which said that Ms. De Lima and self-confessed drug lord Kerwin Espinosa met up in Baguio City.

“The affidavit was written by a police officer in a police station in Albuera, Leyte, by the orders of the former chief of the Albuera police,” Mr. Adorco said.

Three other witnesses have earlier retracted their testimonies implicating Ms. De Lima in the illegal drug trade. They all claimed to have been coerced by government officials into falsely accusing her.

Another witness, Joel Capones, testified on Monday during Ms. De Lima’s bail hearing in a Muntinlupa court that he did not have knowledge of drug money worth P1.4 million that was allegedly pocketed by her.

Last week, a Muntinlupa court dismissed a contempt case against the senator and her lawyer.

The incoming Department of Justice secretary, Jesus Crispin C. Remulla, said last week that he is open to reviewing the case against the senator. He noted that courts generally frown upon retractions. — John Victor D. Ordoñez

MGB says nickel mining in Davao Oriental outside protected area, not an open-pit mine

June 1, 2022 | 7:08 pm

THE MINES and Geosciences Bureau (MGB) has clarified that the nickel mining project in Davao Oriental is not an open-pit mine and confirmed a local government’s earlier statement that its location is outside the Mt. Hamiguitan Range Wildlife Sanctuary, a declared protected area and UNESCO World Heritage Site.

“Please be informed that the Austral-Asia Link Mining Corporation and Hallmark Mining Corporation (ALMC/HMC)… are nickel mines with valid and existing Mineral Production Sharing Agreements… and employ strip or contour mining method only,” the bureau’s Davao regional office said in a statement.

It also said that the companies have “already waived a portion of their mining claims to be part of the protected wildlife sanctuary.”

HMC says on its website that it “relinquished 7,200 hectares to adequately expand the Hamiguitan World Heritage Site.”

The delineation of the buffer zone boundaries was undertaken in coordination with the Department of Environment and Natural Resources (DENR), according to the mines bureau.

“This office acknowledges the concerns raised by various environmental groups and advocates,” it said. “Rest assured that you are heard and that the DENR is likewise putting its best foot forward to keep our environment and natural resources sustainably managed.”

The local government of Mati City, Davao Oriental’s capital and host of the project, earlier allayed public concern over the project following photos posted on social media about the mining site’s location.

Advocacy group Interfacing Development Interventions for Sustainability (IDIS), Inc. said the mining project’s close proximity to Mt. Hamiguitan as well as the Pujada Bay Seascape, also a protected area, poses a serious environmental threat.

“Regardless of the claim that it is outside the protected area delineation, we strongly uphold and fight for the ecological rights and integrities of these watersheds from ridge to reef,” IDIS said. — Maya M. Padillo

PEF needs P56M for new center to relocate Philippine eagles

June 1, 2022 | 7:08 pm

eagle-Geothermica-PEF — PHILIPPINE EAGLE FOUNDATION

THE PHILIPPINE Eagle Foundation (PEF) will need P56 million to build a new center to protect its flock of eagles from Avian Flu and other threats due to increasing human activities around its current location in Davao City.

PEF Development Manager Andi Baldonado said the new site will still be within the city and the local government is providing a 50-hectare land.

“We are working with the city government of Davao to allow us to use land owned by the city in Barangay Eden. We are working on the release of the usufruct to allow us to use the facility for captive breeding and rescue rehabilitation center,” she said during the Kapehan sa Dabaw at SM City Davao on Monday.

“We are still in the initial phase but we are grateful that the city government is supportive of this emergency plan,” she said.

No Avian Flu case had been recorded in the city, but Ms. Baldonado said the recent outbreak in Magsaysay town in Davao del Sur, which is about 90 kilometers southwest of the PEC, already puts their 34 Philippine eagles at risk.

She said the relocation is also part of a long-term plan to have a site that is more conducive for breeding and other conservation activities.

The current center in Malagos has become more “susceptible to infection,” she said, citing the rise of more game farms around the area, among other human activities.

The annual Philippine Eagle Week will be celebrated on June 4 to 13 with “AgiLaya: Lasting Freedom for the Philippine Eagle” as this year’s theme. PEF will stage an exhibit at the SM Lanang Premier highlighting conservation milestones and continuing threats to the country’s national bird. — Maya M. Padillo

SC reverses graft charges vs cop over 2009 chopper scam

June 1, 2022 | 7:07 pm

THE SUPREME Court (SC) has reversed an appellate court decision that affirmed an Ombudsman investigation convicting a police officer of graft for her alleged involvement in an irregular purchase of secondhand choppers amounting to P105 million in 2009.

In a decision dated Oct. 13 last year and made public on May 31, the High Court said the conclusions of the Court of Appeals (CA) and the Ombudsman were based on speculation.

The SC had also reinstated the police officer with back payment of the salaries she did not receive due to her dismissal from service.

“The Ombudsman theorized that petitioner should have gone beyond performing a routine ocular inspection,” according to a copy of the ruling written by SC Associate Justice Samuel H. Gaerlan.

“These circumstances led the Ombudsman to make a blanket statement that petitioner knowingly conspired with other PNP officials to hide the helicopter units’ secondhand nature,” the High Court said. “We cannot sustain the Ombudsman’s blunt hypothesis.”

Maria Linda A. Padojinog, the petitioner, was previously found guilty of violating the Anti-Graft and Corrupt Practices Act by the Ombudsman for allowing the purchase of secondhand choppers despite previously inspecting the aircrafts. The police officer was subsequently dismissed from service following the conviction.

She claimed in her counter-affidavit that she was only a member of the bids and awards working group of the PNP, which had no authority to vote on the purchase.

The High Court stressed that the police officer did not have the authority to approve or recommend the purchase and delivery of the helicopters, which does not make her administratively liable for the anomalous purchase.

The SC earlier affirmed the dismissal of a former police director, as it ruled that his approval of the purchase caused an “immense debilitating effect on the government service.”

In April, the High Court ordered the anti-graft court Sandiganbayan to drop a graft case against former first gentleman Jose Miguel T. Arroyo due to lack of evidence. — John Victor D. Ordoñez

Customs bureau to donate smuggled fuel to coast guard, military

June 1, 2022 | 7:07 pm

THE BUREAU of Customs (BoC) will turn over 47,000 liters of unmarked fuel to the Philippine Coast Guard and to the Armed Forces of the Philippines, the Department of Finance said on Wednesday.

The donation comes from enforcement activities under the Customs’ marking program, which is intended to curb smuggling by injecting a special dye into fuel products to indicate payment of duties and taxes.

The seized supply comes from the premises of Joycel Bus Lines in Caloocan; facilities of Lemiz Fuel Station and Star Oil/Min Ley Gasoline Station in Meycauayan, Bulacan; Fuel Source Gas Station in Cabanatuan, Nueva Ecija; and a gas station in Pampanga.

The coast guard will receive 41,356.8 liters, while another 6,000 liters will be given to the military.

Section 1141 of the Customs Modernization and Tariff Act allows goods that are subject to forfeiture proceedings to be donated to another agency, upon the approval of the Finance secretary. — Tobias Jared Tomas

Maritime patrol ship

June 1, 2022 | 7:06 pm

A 97-meter multi-role response vessel for the Philippine Coast Guard, commissioned as BRP Melchora Aquino, is welcomed in Manila on June 1. It is the second of two such ships modeled after the Japan Coast Guard’s Kunigami-class vessel which is capable of conducting sustained maritime patrols in the West Philippine Sea and Philippine Rise.

Rafa Nadal beats Djokovic in epic quarterfinal clash to reach French Open semis

June 1, 2022 | 6:44 pm

PARIS — Talks of an end to Rafael Nadal’s reign proved premature once again as the claycourt king stayed on course for a record-extending men’s 22^nd Grand Slam title by beating archrival Novak Djokovic 6-2, 4-6, 6-2, 7-6(4) in a vintage French Open quarterfinal clash on Tuesday.

The 13-time Roland Garros champion, beaten by the world number one in the semifinals here last year, arrived in Paris on the back of two injuries that had hampered his preparations.

Having already survived a five-set thriller against Felix Auger Aliassime in the previous round, the Spaniard, who has only lost three times at the French Open since his first campaign in 2005, knows every inch of the immense court Philippe Chatrier and Djokovic paid for the reminder.

The Serbian is still stuck at 20 Grand Slam titles after being barred from taking part in the Australian Open by local authorities over his refusal to get vaccinated against coronavirus disease 2019 (COVID-19) — a major that Nadal won.

On the day teenager Carlos Alcaraz, who has been widely tipped as his successor, was knocked out, Nadal threw the punches and had defending champion Djokovic on the ropes in a high octane start under the spotlights.

Djokovic fought back in an 88-minute second set but the 35-year-old Nadal, backed by a partisan crowd, found the resources to end it in four sets despite being a breakdown in the fourth and set up a meeting with German third seed Alexander Zverev for a place in Sunday’s final.

Zverev beat Alcaraz in four sets earlier.

MAGIC NIGHT
“It’s a very emotional moment for me. Thank you, everyone. It’s incredible, the support I get from you. Everyone knows how important it is for me to play here. It’s the most important tournament of my career,” Nadal said on court after the four-hour-12-minute tug of war.

“Very tough match. Djokovic is one of the best players in history. Playing against him is always a big challenge. Against him, there’s only one way to play — at your best level from the first point to the last.

“And today was a magic night for me. Unexpected level from me.”

A 10-minute opening game, won by Nadal on Djokovic’s serve, set the tone of the clash of the heavyweights.

“Rafa, Rafa!” the crowd chanted.

He broke a second time with a trademark forehand winner down the line before wrapping up the first set on serve when Djokovic made his ninth unforced error.

The Serbian fell 3-0 behind in the second, but a poorly-executed drop shot by Nadal allowed him to pull a break back.

A smile appeared on Djokovic’s face. In a key 18-minute sixth game, Djokovic broke again on his fifth attempt when Nadal’s backhand went wide.

He faced a break point in the following game but Nadal was playing too short and the Serbian bagged his fourth consecutive gale in a spectacular turnaround.

Nadal just managed to hold for 4-4 but cracked on serve at 5-4 as Djokovic leveled the match.

The Mallorcan, however, started the third set in similar fashion as the first, racing to a 4-1 lead and wrapping it up on yet another unforced error from Djokovic.

In a seesaw contest, Djokovic regained the upper hand to open a 3-0 lead in the fourth set but Nadal would not go into a fifth set, breaking back for 4-5 before forcing a tie-break in which he gave his opponent no chance. — Reuters