(Eagle News) — President Rodrigo Duterte has vetoed several provisions of the Tax Reform for Acceleration and Inclusion Act.
A copy of President Rodrigo Duterte’s veto message showed that he vetoed the reduction of the income tax rate of employees of regional headquarters, regional operating headquarters, offshore banking units and petroleum service contractors and subcontractors.
He also vetoed the exemption from percentage tax of gross sales/receipts not exceeding P500,000 of self-employed professionals, the zero-rating of sales of goods and services to separate customs territory and tourism enterprise zones, the earmarking of incremental tobacco taxes, and the exemption of various petroleum products from excise tax when used as input, feedstock, or as raw material in manufacturing of petrochemicals or in the refining of petroleum products, or as replacement fuel for natural gas fired combined cycle power plants.
In vetoing the first item, Duterte said the provision was in violation of the Equal Protect Clause under the 1987 Constitution.
He said it also violated the rule of equity and uniformity in the application of the burden of taxation.
Duterte said the second item was vetoed as it “will result in unnecessary erosion of revenues and would lead to abuse and leakages” if it was approved.
The provision on the zero-rating of sales of goods and services to separate customs territory and tourism enterprise zones, he said, “goes against the principle of limiting the VAT zero-rating to direct exporters.”
In vetoing the fourth, Duterte said the approval of such “effectively amends the Sin Tax Law or Republic Act No. 10351,” and “will effectively diminish the share of the health sector in the proposed allocation.”
As for the fifth provision, he said it “runs the risk of being too general, covering all types of petroleum products, which may be subject to abuse by taxpayers, and thus lead to massive revenue erosion.”
“At any rate, the Tax Code already identifies which petroleum products can be exempted,” he said.
TRAIN was signed into law by Duterte three days ago.
The Palace said the law “corrects a longstanding inequity of the tax system.”
It said it does this by reducing the income taxes of 99% of income taxpayers.
With the passage of the law, the government said almost all the 7.5 million income taxpayers in the country should see a reduction in their income tax rates starting next year.