www.tmap.org.ph
January 2015 Issue
TMAP MONITOR TMAP Holds 2015 Inaugural Meeting and Induction TMAP held its 2015 inaugural meeting and induction of officers and board of directors on January 28, 2015. The Honorable Alan Peter S. Cayetano, Senator of the Republic of the Philippines, was the inducting officer and keynote speaker. The following members of the Board and officers were inducted: President: Terence Conrad H. Bello (Baniqued & Baniqued) Vice President – Internal Affairs: Benedict R. Tugonon (Quiazon Makalintal Barrot Torres Ibarra & Sison) Vice President – External Affairs: Maria Lourdes P. Lim (Isla Lipana & Co.) Secretary: Marivic D. Sarmiento (Castillo Laman Tan Pantaleon & San Jose) Treasurer: Eleanor L. Roque (Punongbayan & Araullo) Auditor: Cynthia L. De la Paz (Picazo Buyco Tan Fider & Santos)
Other members of the Board are outgoing President Rina-Lorena R. Manuel (Smart Communications, Inc.), Priscilla B. Valer (Romulo Mabanta Buenaventura Sayoc & Delos Angeles), Raymund S. Gallardo (Gallardo Songco & Associates), Jewel M. Baga (Development Bank of the Philippines), Romeo H. Duran (Sapalo Velez Bundang and Bulilan), Belinda E. Dugan (Manila Oslo Renewable Ent., Inc.), Leilah Yasmin E. Alpad (Calenergy International Services, Inc.) (Continued on page 3)
TMAP Proposes New Tax Table and Tax Code Amendments to Jumpstart Tax Reform On the first working day of the year, TMAP filed with the Ways and Means Committees of both Houses of Congress its comprehensive proposal for tax reform, which includes a revision of the income tax table and the simplification of business taxes imposed on individuals. In addition, TMAP also submitted certain proposals to amend provisions of the Tax Code to help address current tax issues, such as the new VAT refund rules. In its letter addressed to Senator Sonny Angara and Congressman Miro Quimbo, chairpersons of the Ways and Means Committee of the Senate and House of Representatives, respectively, TMAP highlighted the following proposals, with the over-all objective of (Continued on page 3)
Promoting Tax Fairness To Enhance National Competitiveness (Excerpt from speech of TMAP President Terence Bello)
uplifting the life of every Filipino.” Studies have shown that a perception of procedural fairness or justice influences tax compliance; there is a link between taxpayers’ perception of procedural justice and their motivations to comply or not to comply with taxation policies as well as its consequent influence on tax compliance. Taxpayers who are less satisfied with their tax authority’s treatment are more likely to question its legitimacy and hold resistant views towards the authority. The taxpaying public’s expectation of taxpayer service from the BIR, however, should also be balanced with a firm (but fair) system of sanctions and penalties since some people would take advantage of a regulatory strategy based purely on cooperation.
What is tax fairness and how is it linked to a competitive economy? Substantive Fairness There are two criteria to measure fairness in taxes: (i) benefits received and (ii) ability to pay. • •
Benefits received means that people should pay taxes in proportion to the benefits they receive from government goods and services Ability to pay means that people’s taxes should be in proportion to their resources. People’s resources differ because they have different amounts of wealth (assets and property such as houses, car, stocks, bonds, bank accounts) or income (wages, interest, dividends, profits, etc.)
Most if not all of you would be familiar with these two concepts because they are codified in our 1987 Constitution. These two criteria make up the substantive aspect of a sound tax system. Procedural Fairness Another aspect of tax fairness as it relates to tax compliance is procedural fairness. In general, procedural fairness relates to the implementation by revenue authorities of tax laws to obtain tax compliance in a manner that is perceived to be fair and just. The BIR’s mission statement reflects procedural fairness: “The Bureau of Internal Revenue is committed to collect taxes for nation-building through excellent, efficient and transparent service, just and fair enforcement of tax laws,
National Competitiveness So how does tax fairness relate to national competitiveness? Applying the same principles of tax fairness to the broader macro-economic perspective would yield the same result. According to various studies, such as the World Economic Forum’s Global Competitiveness Report, business decisions are not only influenced by tax policy parameters (e.g. tax bases and rates) but also by the way in which a tax system is administered. Tax policy and administration can contribute to a competitive economy in a number of ways and key questions for tax authorities, according to these studies, include: • • • • • •
Does the tax administration have a good understanding of business models? Does it provide a good “service” to business? Does it provide certainty and predictability in the application of the rules? Are the rules applied in a consistent and coherent manner? What is the cost to business of complying with the letter and spirit of the law; is there a level playing field in terms of tax compliance? Are stakeholders being consulted and involved in the formulation and application of new tax policy initiatives?
All of these factors can influence multinational enterprises’ decisions. Governments will, of course, have to balance these factors against the need to protect the revenue base. (continued in page 4)
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TMAP Holds 2015 Inaugural Meeting and Induction (continued)
higher compliance, and (2) the opposition on controversial VAT refund claim new rules. The following activities, among others, were also done – Lingkod TMAP, Tax Seminars, Golf Cup, participation in the AOTCA international tax conference, Christmas party, TMAP Kapihan, and Summer Outreach project. The inaugural meeting was preceded by a Eucharistic Celebration, to thank the Lord for TMAP’s accomplishments in 2014 and to seek the Lord’s blessings for 2015. The Mass was presided by Fr. Dave Concepcion while The Liturgical and Music Ministries of the Smart Employees Roster of Volunteers of the Eucharist (SERVE) served as the choir.
Ester R. Punongbayan (E. Punongbayan Global Outsourcing, Inc.), Pepito G. Po (Bernaldo Directo & Po Law Offices), and Rodolfo Arvin D. Agbayani (Smart Communications, Inc.) 2015 TMAP President Atty. Terence Conrad H. Bello unveiled this year’s theme: “Promoting Tax Fairness to Enhance National Competitiveness”. This 2015, TMAP would be at the forefront and would be relevant in making our tax system fair for the greater good of the national economy and to uplift the lives of Filipinos. Outgoing President Rina Manuel, in her valedictory speech, recalled TMAP’s accomplishments in 2014 defended the rights of taxpayers and encouraged taxpayers to contribute to nation-building. TMAP members were engaged through interesting professional programs and advocacies. TMAP focused on two key national tax issues – (1) the lowering of individual income tax rates and simplification of the tax system to encourage
TMAP Proposes New Tax Table and Tax Code Amendments to Jumpstart Tax Reform (continued) ensuring greater fairness and equity in the tax system, and simplifying the system to enhance compliance, expand the base and, consequently, increase Government revenue collections. 1) TMAP proposes a revised income tax table for individual taxpayers with the following features: a. Simplified yet progressive income tax table; b. Adjusted tax base to address the “bracket creep” phenomenon; c. Reduced top statutory rate from 32% to 30%, which is at the same level as corporate taxpayers; d. Unified P300,000 tax-exempt threshold to simplify the various tax deductions/exemptions; and e. Lower income tax rates to make Philippine workers competitive in view of workforce mobility upon ASEAN integration. (continued in page 5)
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TMAP Welcomes New Members
Ms. Mona Lissa O. Sanson (Tollways Management Corporation) -- Mona is the Asst. Vice President for the Finance Dept. She is a Certified Public Accountant. She obtained her BSBA major in Accountancy degree (cum laude) from the Phil. School of Business Administration in Q.C. She completed a Leadership and Management Program at the Ateneo. Atty. Jenalyn Carabeo Suarez (Car-Sua Management Consultancy) -- Jennah is a CPA-Lawyer. She finished her Bachelor of Science in Accountancy degree from St. Paul College in Paranaque and her law degree from UST. She also has an Executive MBA from the Ateneo.
TMAP President Terence Conrad H. Bello inducted seven new members during the 2015 inaugural meeting. TMAP’s new members are: Atty. Wilfredo U. Villanueva (SyCip Gorres Velayo & Co.) -- Willie is the Head of SGV’s Tax Division and General Counsel. He has been with SGV for 24 years rendering various tax services to clients. He obtained his Bachelor of Arts degree from the Ateneo de Manila University and Bachelor of Laws from the University of the East - College of Law graduating valedictorian and cum laude. He completed the Advanced Executive Program at the Kellogg School of Management, Northwestern University, Illinois USA. Atty. Norina Aileen Sanchez-Seraspi (Globe Telecom, Inc.) -- Aileen is the Head of Globe Telecom, Inc.’s Tax Group. She is a CPA-Lawyer. She obtained her BS Accountancy degree from UST and Bachelor of Laws from San Beda College. Mr. Amormio T. Latorre (Globe Telecom, Inc.) -- Amor is the Director for Tax Planning and Advisory in Globe Telecom, Inc. He is a Certified Public Accountant. He obtained his Bachelor of Science in Accounting degree (cum laude) from UP Visayas in Tacloban City. He also has an MBA from the Ateneo Graduate School of Business and is a Gold Medal Awardee. Atty. Eva R. Segui (Development Bank of the Philippines) -- Eva holds the position of Asst. Vice President in the Opinion Unit of the Legal Services group. She finished her AB Economics degree (cum laude) and law degree from the Aquinas University of Legazpi in Albay.
Atty. Michael Pangilinan Garcia (Romulo Mabanta Buenaventura Sayoc & delos Angeles) -- Michael is an Associate Lawyer in the Tax Department of Romulo. He graduated from the Ateneo de Manila in 2004 with a degree in Bachelor of Arts major in Economics and in 2008 with a Juris Doctor degree. He was a consistent Dean’s Lister and ranked no. 3 (Second Honors) of the Graduating Class of 2008.
Promoting Tax Fairness To Enhance National Competitiveness (continued) There is potential economic growth, therefore as a result of enhancing and promoting tax fairness. In the World Economic Forum’s Executive Opinion Survey 2014, tax regulations and tax rates were cited as among the problematic factors for doing business. In a world with high levels of capital mobility, countries simply cannot ignore the potential effect on investment of how their tax rates compare with other countries. How Can TMAP Help? In line with the 2015 theme to cultivate a tax environment that creates a favorable investment climate, TMAP is committed more than ever to lend its assistance to the BIR and government tax policy makers (such as the Ways and Means Committee of both Houses of Congress) to identify and find the right balance between service and enforcement recognizing that good service plus good enforcement is the most effective way to achieving good voluntary compliance. Hopefully, with your help, TMAP would be at the forefront and would be relevant in making our tax system fairer for the greater good of the national economy and to uplift the lives of every Filipino.
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TMAP Proposes New Tax Table and Tax Code Amendments to Jumpstart Tax Reform (continued)
2) Given the all-in P300,000 tax-exempt threshold, TMAP proposes to re-define tax-exempt “de minimis” benefits for salary and wage earners to exclude disguised compensation, such as cash allowances. Under its proposal, “de minimis” benefits will be limited only to occasional benefits, the value of which and the frequency with which it is provided is so small as to make accounting for it unreasonable or impractical. TMAP also recommends some changes in the Fringe Benefits Tax (FBT) system to remove the difference in tax treatment between managers/supervisors and rank and file employees. 3) TMAP proposes a simplified tax system for business income earners and professionals. TMAP believes that simplification, which reduces compliance costs on the part of the taxpayer, would have the following benefits: • Cost savings and greater ease of doing business, which encourages the growth of existing businesses and the creation of new ones; • Businesses in the informal sector moving out into the formal sector; • Reduced corruption by increasing transparency and minimizing the points of contact between taxpayers and BIR; and • Improved compliance on the part of the taxpayer and reduced cost of collection on the part of the BIR.
a. Simplified income tax base: incentivize the use of the Optional Standard Deduction (OSD) Method b. Simplified VAT system: introduce the presumptive VAT regime for taxpayers transitioning from VATexempt to up to P10M in annual sales, and provide for special Withholding VAT regime for individual taxpayers with sales to VAT-registered corporate clients. c. Simplified bookkeeping and invoicing/receipting requirements: applicable to taxpayers with annual sales of P10M and below (i.e., those under the VATexempt and presumptive VAT regimes). d. Grant of Tax Amnesty: to enable taxpayers to start with a clean slate once they become part of the system, without fear of being harassed for non-compliance in prior years. 4) TMAP proposes an increase in capital gains tax rates at the rates of 10% for the 1st P1M and 15% in excess of P1M. This will bring the CGT rates closer to the effective personal income tax rates and still make the rates competitive within the ASEAN region (i.e., ranging from 10% to 20%). Meanwhile, TMAP also proposed certain Tax Code amendments to address significant taxpayer issues arising from the sudden, radical change in interpretation by the BIR. The amendments seek to codify long-standing interpretations upheld by past BIR administrations, such as the deductibility of expenses, protesting assessments, appeals process on VAT refund claims, and preservation of books of accounts, among others. Other proposed Tax Code amendments also include certain provisions to ensure that proper consultation and due process are observed by the BIR in its power to interpret tax laws, the requirement for public notice/hearing and publication for the issuance of new rules and regulations by the DOF/BIR, and the payment of interest on VAT refund claims beyond a mandatory period.
With this, TMAP proposes the following measures towards a simplified tax system:
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TMAP Committees TMAP’s 2015 Board of Directors convened on January 10, 2015 and appointed committee chairmanship, as follows: Membership Committee Chair: Jewel M. Baga Co-Chair: Romeo H. Duran Finance Committee Chair: Benedict R. Tugonon Members: Ester R. Punongbayan Pepito G. Po Professional Development Committee Chair: Marivic Sarmiento Co-Chair: Raymund S. Gallardo Special Events Committee Chair: Belinda E. Dugan Co-Chair: Cynthia L. De La Paz Member: Ester R. Punongbayan Legislative Committee Chair: Priscilla B. Valer Co-Chair: Romeo H. Duran Members: Rodolfo Arvin D. Agbayani Pepito G. Po Publications Committee Chair: Leilah Yasmin E. Alpad Co-Chair: Rodolfo Arvin D. Agbayani International Relations Committee Chair: Rina-Lorena R. Manuel
Contact us Unit 1904, Cityland Herrera Tower Corner V. A. Rufino & Valero Streets Salcedo Village, Makati City Tel. No. 840-2325 Fax No. 346-8104 Website: www.tmap.org.ph E-mail: tax_map@yahoo.com
Happy birthday to the following TMAP members who are celebrating their respective birthdays in January and February!
JANUARY 1 3 4 5 6 7 9 9 9 10 10 15 16 18 21 22 23 25 30
ALPAD, Leilah Yasmin MENDOZA, Edgar V. GANAL, Reynaldo M. MATIBAG, Jose R. UY, Loly GOROSPE, Benjamin III M. SANDEJAS, Jose R. ABARCA, Josette Adrienne A. CRUZ, Jose Jaime V. MARASIGAN, Diosdado B. FERNANDEZ, Jayson L. GALLANOSA, Joel V. VALER, Priscilla B. CAPAQUE, Charles S. GATUZ, Trinity VESAGAS, Shirley S. JOSE, Leonardo M. PIO DE RODA, Alfredo III Z. SALVADOR, Serafin Jr. U.
FEBRUARY 1 1 3 5 6 7 7 9 13 15 18 19 20 20 21 22 28
ABENIR, Anthony Brett PATRICIO, Cecilia R. DEL ROSARIO, Jean P. PUNONGBAYAN, Ester R. SISON, Benedicto TERRADO, Julie Ann S. BANAAG, Anacleto ARANAS, Jesus Clint O. CARDIÑO, Antonio L. VALDEZ, Enrico G. TUGONON, Benedict R. DUMLAO, Edgar D. MAMURIC, Jose Roberto L. ALAS, Danilo T. GATUZ, Trinity DE LEON, Edward M. DUGAN, Belinda E.
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