The creation of a Tax Expenditure Account (TEA) in the annual national budget to reflect the amount of tax incentives granted by the government to private individuals and corporations, is being proposed in Congress.
Rep. Jocelyn Limkaichong (1st District, Negros Oriental), chairperson the Committee on Appropriations, and author of House Bill 6785 or the proposed “Tax Incentives Management and Transparency Act”, noted that the present system of accounting for tax expenditures in the General Appropriations Act (GAA) only includes tax incentives granted to National Government Agencies and Government-Owned or -Controlled Corporations (GOCCs).
“The bulk of tax incentives which are those granted to private individuals and corporations are not accounted for, she said. Hence, the magnitude of these incentives remains largely unknown, she stressed.
The proposed measure aims to address this serious information gap without posing additional administrative burden to investors,” said Limkaichong.
The proposed law will make it a policy of the State to promote fiscal prudence and transparency in the proper management and grant of tax incentives.
The bill also provides that the DOF, together with the BIR and the Bureau of Customs, shall create a single database of all tax incentives granted by the IPAs and other government agencies, monitor the incentives granted, and submit an annual Tax Expenditure Report to the President and to the Chairman of the House Committee on Appropriations and the Chairman of the Senate Committee on Finance as part of the annual GAA.