www.tmap.org.ph
NOVEMBER 2014
TMAP MONITOR TMAP Joins 2014 AOTCA Taipei Conference An 11-man TMAP delegation led by President Rina Manuel and four (4) TMAP Past Presidents attended the 2014 AOTCA Annual Meeting and International Tax Conference last October 22-24, 2014. The 2014 AOTCA event was hosted by the Tax-Accountancy Association of Chinese Taipei in Regent Hotel, Taipei. President Manuel was accompanied by TMAP Past
approved the creation of a Technical An 11-man TMAP delegation led by President Presidents Euney Mata-Perez, Leny Oxales, Cris Committee, which willGuhit provide and inputs and Rina Manuel and four (4) TMAP Past Presidents commentaries on global tax issues attended the 2014 AOTCA Annual Meeting and Cecile Patricio in the AOTCA General Meeting, wherein raised by the Organization for Economic Co-operation International Tax Conference last October 22-24, TMAP’s Euney Mata-Perez was re-elected as AOTCA Vice-hopes and Development (OECD). AOTCA 2014. The 2014 AOTCA event was hosted by that meeting this committee enable the Asiathe President Tax-Accountancy of Chinese for Association the coming year. The alsowill approved Oceania region to have a clear and strong Taipei in Regent Hotel, Taipei. the creation of a Technical Committee, which will provide voice on international tax matters. President Manuel was accompanied by TMAP inputs and commentaries on global tax issues raised by the As discussed by the TMAP Board of Past Presidents Euney Mata-Perez, Leny Oxales, Directors in its meeting held last November CrisOrganization Guhit and Cecile Patricio in the AOTCA for Economic Co-operation and Development 2014, TMAP Vice-President for Internal General Meeting, wherein TMAP’s Euney Mata(OECD). AOTCA hopes that this6,Affairs committee will enable the Randy Bello and TMAP Legislative Perez was re-elected as AOTCA Vice-President Committee Head Precy Valer, for Asia-Oceania the coming year.region The meeting to havealsoa clear and strong voice on who also Continue on page 6 international tax matters. As discussed by the TMAP Board sessions held specifically among TMAP of Directors its meeting held last November 6, 2014, TMAP Reforming the in Individual Tax tackling improvements and Vice-President for Internal Affairsmembers Randy Bello TMAP System rationalization of theand individual income tax TMAP presented during the October GMM held in the country. Legislative Committee Head Precy Valer, who also attended on 29 October 2014 the group’s various proposals AOTCA conference, were nominated by were the Board andthe recommendations to reform of the individual The proposals presentedasbyits TMAP income tax system. President Rina Manuel and TMAP member representatives in the AOTCA Technical Committee.
Adrian Bancoro.
TheMeanwhile, proposals resulted various International Kapihan thefrom AOTCA
Conference discussed on page 2 the hottest global tax issues, suchContinue as Base Erosion and Profit Shifting (BEPS) and the taxation of digital economy. An update on the Taxpayer Model Charter project by AOTCA,
www.tmap.org.ph
NOVEMBER 2014
Reforming the Individual Tax System from page 1
A panel of reactors coming from various sectors also attended the GMM namely: Mr Ferdinand Gaite of COURAGE, Ms. Susanita Tesiorna of the Alliance of Workers in the Informal Sector (ALLWIES), Mr. Raymond Abrea of the Center for Strategic Reform of the Philippines (CSR) and Dr Myrna Desabelle of ACPAPP. The Honorable Senator Bam Aquino was also present to give his reaction to the proposals. All the reactors expressed their support to the proposals presented by TMAP. Mr. Gaite even emphasized that currently “(O)urs is not a living wage but a libing wage. Our take home pay is not enough to take us home.�
For his part, Senator Aquino welcomed the proposals and noted that the coming discussions will be a battle of political will. He shared that various bills pending in the senate include the Minimum Income Earners Bill, Start-up Business Bill and Simplified Tax Regime for SMEs. He underscored that the issue on reforming the income tax for individuals is a social justice issue and not a revenue issue. The objectives of proposed amendments were (a) to ensure greater fairness and equity in the tax system and (b) simplify the system to enhance compliance, expand the base and increase Government revenue collections. Continue on page 5
2
www.tmap.org.ph
Induction of New Members Two new member firms joined TMAP and their representatives were inducted during the October GMM. These are 1. Atty. Andrei Josef Kasilag is the Tax Manager of San Miguel Brewery. After joining SGV Manila as a senior associate, he moved to ACCRALAW as an associate in its Davao Branch. He is a professor at the UM College of Legal Education. Atty. Kasilag obtained both his BS major in Management and his law degree in Ateneo de Manila.
NOVEMBER 2014 program in De la Salle University Graduate School of Bisiness-FEU. His former work experiences include SGV, Standard Chartered Bank, GE Money Bank, BDO Unibank. He was a former member of TMAP for 3 years during his stint in GE Money Bank.
2. Mr. Nelson V. Soriano is the Country Tax Leader of General Electric Philippines, Inc. He graduated cum laude in PUP, BS Accountancy. He is taking MBA-Juris Doctor (law) dual degree
TMAP and Business Groups Issue Joint Statement on the New VAT Rule TMAP, together with other business associations, held a press conference at the Hotel Intercon Manila on November 5, 2014 to release a joint statement on the new VAT refund rule. The panel who addressed the media included Mr. Shameem Qurashi (Chairman, Philippine Association of Multinational Companies’ Regional Headquarters, Inc.), Mr. Henry Schumacher (VicePresident for External Affairs, European Chamber of Commerce of the Philippines), Mr. Ramon Garcia (Past President, Association of Certified Public Accountants in Public Practice), Mr. Stephen Antig (Executive Director, Pilipino Banana Growers and Exporters Association) Atty. Randy Bello (Vice-President for Internal Affairs, TMAP), Atty. Benedicta Du-Baladad (ChairpersonTaxation Committee, Philippine Chamber of Commerce and Industry), Mr. John Casey (Vice-
President, Australian and New Zealand Chamber of Commerce) and Mr. Nobuo Fujii (Vice-President, Japanese Chamber of Commerce and Industry of the Philippines Inc.). The panel represented twenty concerned associations. The joint statement of twenty business associations voices out serious concerns on BIR Revenue Memorandum Circular (RMC) 54-2014, which prescribes the new rules for VAT refund claims. The Group reiterated its position that RMC 54-2014 removes the fundamental right of a taxpayer to an administrative appeals process, violates the non-retroactivity rule, and imposes impractical and unrealistic requirements that are difficult to comply with. To restore investor confidence and ensure national competitiveness, the group strongly recommended that the Government withdraw RMC 54-2014 and uphold the taxpayer’s right to an administrative appeal process. Continue on page 4
3
www.tmap.org.ph
TMAP participates in DOF International Tax Forum The Department of Finance (DOF) hosted an International Tax Forum, which focused on having a dialogue on taxation in the context of ASEAN Regional Integration. The forum was held last November 12-14, 2014 at the Fairmont Hotel. TMAP was invited to the Forum along with other private sector participants. Other participants included foreign tax administration delegates and public sector representatives coming from the BIR, DTI, DOJ, NTRC, STRO, and Congress/Senate Committees on Ways and
NOVEMBER 2014 Means, among others. The forum featured international tax experts coming from the Organization for Economic Cooperation and Development (OECD), International Bureau of Fiscal Documentation (IBFD), International Monetary Fund (IMF), and DAI, among others. Philippine officials who spoke during the conference included DOF Undersecretary Jeremias Paul, BIR Commissioner Kim Jacinto-Henares, DOF Undersecretary Carlo Carag and SEC Chairperson Teresita Herbosa. Continue on Page 5
TMAP and Business Groups From page 3
In addition, TMAP gave the following statement in support of the joint statement. "TMAP echoes and fully supports the Joint Statement read during today's press conference. We at TMAP are committed to upholding taxpayer rights and responsibilities. With that in mind, we believe that RMC 54-2014 amounts to an administrative legislation. This is a classic case where an administrative rule is no longer consistent with the law it seeks to implement.
TMAP President Rina Manuel addressing the press regarding the VAT issues
A full and retroactive implementation of RMC 54-2014 will result to the outright confiscation of pending VAT claims that run already in the billions and counting. These un-refunded VAT claims represent an unfulfilled promise made by the government to investors who invested in the Philippines based on that commitment. We therefore respectfully request the DOF and BIR leadership to withdraw and/or reconsider RMC 54-2014. Thank you."
TMAP VP-Internal Atty. Randy Bello also attending the press conference.
4
www.tmap.org.ph
TMAP participates in DOF From page 4
Topics discussed in the forum included understanding the ASEAN Economic Community, best practices in tax treaty relief, international challenges such as Base Erosion and Profit Shifting (BEPS) and Automatic Information Exchange (AIE), domestic challenges such as reducing inequality through taxation, and specialized topics such as taxation of e-commerce and capital markets, tax policy as growth driver, and consumption taxes vs. income taxes in promoting equity. The forum also discussed the latest global tax projects initiated by the OECD. This includes the Treaty Relief And Compliance Enhancement (TRACE) project, which proposes an Authorized Intermediary system for claiming withholding tax relief at source on portfolio investments. The OECD also proposes the concept of Audit without Borders, wherein international tax experts are deployed to work with local tax administrators to enable the sharing and transfer of tax audit knowledge and skills. A multi-lateral mechanism can also be developed to allow tax auditors from other tax administrations to enter another jurisdiction to conduct tax audits.
NOVEMBER 2014 The presentation by various international tax experts also disclosed the following interesting tax facts and situation in the Philippines: The Philippines has the highest effective tax rate in the ASEAN region but, there tax effort is particularly low. This can be due to the grant of many tax exemptions and/or poor tax administration. The Philippines has the most attractive fiscal incentives in the region (especially those under PEZA) and ironically, it has the lowest Foreign Direct Investment (FDIs). Based on empirical study, the reduction of personal income tax, coupled with an increase in property taxes, will help spur long-term growth. The lowering of personal income tax rates will result to an increase in consumption, which, in turn, will result to an increase in VAT and income taxes. With these relevant take-away’s from the International Tax Forum, TMAP hopes that Philippine tax policy makers and administrators will seriously consider the various tax reform proposals, which the international tax experts also subscribe to. Reforming
Reforming
from page 2
The proposed revised income tax table pegged from 1 P2.5 the top rate of 30%page on income above Million while the first P300K is non-taxable. The non-taxable portion combines all existing exemptions such as personal exemption, additional exemption and exempt benefits. The proposal is designed to update the tax base to consider inflation effect since 1986. It also unified the tax exemption threshold for all types of individuals and hopefully, increases the country’s competitiveness. 5
www.tmap.org.ph TMAP joins AOTCA from page 1
attended the AOTCA conference, was nominated by the Board as its representatives in the AOTCA Technical Committee. Meanwhile, the AOTCA International Conference discussed the hottest global tax issues, such as Base Erosion and Profit Shifting (BEPS) and the taxation of digital economy. An update on the Taxpayer Model Charter project by AOTCA, Confederación Fiscale Européenne (CFA) and Society of Trust and Estate Practitioners (STEP) also disclosed that the report will soon be finalized after receiving comments from the OECD. The conference speakers included AOTCA advisors and other international tax experts, including TMAP’s very own Euney MataPerez, who discussed her views as a
The Tax
Management Association of the Philippines, Inc. is a non-stock corporation founded on October 22, 1981 established primarily to professionalize tax practice and provide a channel by which the private sector may actively participate in the drafting of tax laws, rules and regulations. At present, TMAP has over 100 members most of whom belong to, or act as consultants for, the top 1,000 corporations. The Association has been instrumental in the development and promotion of reforms in the country’s tax laws and in tax administration by actively participating in public hearings and submitting position papers in connection with the passage of revenue laws, rules and regulations. TMAP raises the level of professionalism and technical competence among its members by keeping them abreast of the latest tax
NOVEMBER 2014 practitioner on BEPS issues in Philippine setting. The AOTCA conference also proved to be very memorable event for TMAP Past President Mata-Perez as she was feted a birthday surprise by the AOTCA General Council and TMAP delegates on two separate occasions last October 23. Meanwhile, Taipei was not all about Tax for the TMAP delegates. They found time to go around the city and visit its beautiful parks, museums and monuments. They went up to Taipei 101 using the world’s fastest elevator and took time out to shop at its famous night markets. At the end of the conference, TMAP looks forward to next year’s AOTCA Meeting and Tax Conference in Osaka, Japan. The event will be held on October 14-16, 2014 with the Japan Federation of Certified Public Tax Accountants as host.
rulings, regulations, issuances, decisions and policies through habitual seminars conducted by experts in government and in the private practice. The Association also conducts regular dialogues with pertinent government officials on policy issues affecting its members. TMAP has instilled and continues to instill among its members competence, professionalism and integrity in tax practice. TMAP believes that responsible tax practice is indispensable to the country’s economic growth and development.
6