SECTOR: Economy
SONA YEAR: 2022
Pass PIFITA
PROMISE STATUS - DATE: In progress as of 07/17/2023
- On Nov. 14, 2022, the House of Representatives approved on third and final reading HB 4339, formerly known as the Passive Income and Financial Intermediary Taxation Act (PIFITA), which amends and repeals certain sections of the National Internal Revenue Code of 1997.
- The counterpart measures in the Senate – 900, 1347, 1364 – are pending at the committee level . On Feb. 7, 2023, Sen. Raffy Tulfo also filed SB 1848, which is pending at the Committee on Ways and Means.
- PIFITA is the fourth package of the government’s Comprehensive Tax Reform Program and also among the administration’s LEDAC-priority measures. If enacted, it will simplify financial sector taxation and make tax compliance easier and more equitable. It seeks to reduce the number of tax bases and rates applicable to passive income, financial intermediaries and financial transactions from 74 to 52; gradually reduce the tax rates on royalties and interests from 20% to 15% from 2023 to 2026; repeal exemption of foreign currency deposit from interest income tax; and remove excise tax exemption of pick-up trucks introduced under the Tax Reform Acceleration Inclusion or TRAIN law.
- The DoF estimates to collect about P25.2 billion through PIFITA from 2024 to 2028.