TWO BILLS intended to invigorate the country’s capital market were approved on second reading at the House of Representatives on Tuesday night.
House Bill (HB) 6017 seeks to scrap the premium and documentary stamp taxes slapped on life insurance, while HB 6379 allows individuals to co-own real estate assets through real estate investment trusts or REITs.
The first would lower the cost of life insurance, encourage more people to buy policies and thereby mobilize savings, while the second would create an alternative investment vehicle.
The two bills were approved without any amendments by House members when these were presented to the plenary for deliberation.
"The imposition of premium and documentary stamp taxes at the first stage of insurance sales raises the average price to consumers as it simultaneously lowers the revenues of the producers," Camarines Norte Rep. Liwayway P. Vinzons-Chato, HB 6017’s author, said in an interview.
"When higher market prices discourage potential buyers from consummating the purchase, the loss in market volume means a loss in the welfare of both buyers and sellers. This loss in total welfare and efficiency affects government adversely as well because the taxable pie has shrunk."
Life insurance premiums are slapped a 5% premium tax as well as a documentary stamp tax equivalent to 0.25% of 1% of the premiums. Insurance firms also pay a 30% corporate income tax.
The Finance department is opposed to the measure, citing forgone revenues of some P2.6 billion annually.
Ma. Teresa S. Habitan, Finance director for fiscal policy and planning, yesterday said the bill, if signed into law, would give life insurance players an advantage over banks and pre-need companies which shoulder a gross receipts tax and a value-added tax, respectively. A wiser move would have been to lower the premium tax to 2%, she said.
HB 6379, meanwhile, allows investors to co-own income-generating real estate assets through a REIT, a stock corporation that pools investors’ funds and invests these in real estate ventures.
Investors may take equity stakes in a REIT, unlike at present where they may only buy the shares of listed property firms if they want to dabble in the property market. Property developers, for their part, get access to capital through the REIT.
The counterpart of HB 6379, Senate Bill (SB) 2639, authored by Senator Edgardo J. Angara, former chairman of the banks, financial institutions and currencies committee, has already hurdled third and final reading at the Senate.
Under the House version, a REIT company must have a minimum paid-up capital of P1 billion, while the approved Senate version requires capital of only P100 million.
Like SB 2639, HB 6379 requires a REIT to be publicly listed with at least 1,000 shareholders.
Allowable investments under the bill are income-producing real properties, real estate-related assets, managed funds, and debt securities and shares. Most of the property investments must be located in the Philippines.
The bill designates the Securities and Exchange Commission as regulator of REITs.
To make a REIT more attractive to investors, congressmen provided exemptions from a slew of taxes, including: the corporate income tax; creditable withholding tax; documentary stamp and creditable withholding taxes on the transfer of real properties; documentary stamp tax on the disposition of securities though the stock exchange, including block sales or cross sales, for five years; and tax on initial public offering and secondary offering of securities.
REITs will have to pay the documentary stamp tax on the original issuance of investor securities; stock transaction tax on the disposition of securities through the stock market; and a final tax of 10% on cash or property dividends.
The Senate bill only exempts a REIT from the documentary stamp tax and creditable withholding tax on the transfer of real property, and subjects it to a corporate income tax rate of 25% for a period of seven years.
Aurora Rep. Juan Edgardo M. Angara, author of HB 6379, said the bill could be approved by the lower chamber Monday next week.
"As to the bicameral conference committee meeting, I’m not yet sure if we could squeeze that in next week or we will have to wait until July to come up with one version of the bill," he said in a telephone interview.
Congress will end its second regular session on June 5. The third regular session is scheduled to open on July 27. — Jhoanna Frances S. Valdez
http://www.bworldonline.com/BW052809/content.php?src=1&id=002
No comments:
Post a Comment