Fiscal Incentives - RA 10708 - Tax Incentives Management and Transparency Act (TIMTA)

In order to establish a mechanism that will effectively account for the foregone revenues through the grant of tax incentives to a number of businesses and activities, RA 10708 was enacted on December 9, 2015. The salient features of the law are as follows:

1. RA 10708 requires all registered business entities to file their tax returns and pay their tax liabilities, on or before the deadline as provided under the NIRC, as amended, using the electronic system for filing and payment of taxes of the BIR. For registered business entities availing of incentives administered by the Investment Promotion Agencies (IPAs), they shall file with
their respective IPAs a complete annual tax incentives report of their incomebased tax incentives, value-added tax and duty exemptions, deductions, credits or exclusions from the tax base as provided in the charter of the IPA concerned, within thirty (30) days from the statutory deadline for filing of tax returns and payment of taxes. In turn, the IPAs shall, within sixty (60) days from the end of
the statutory deadline for filing of the relevant tax returns, submit to the BIR, their respective annual tax incentives reports based on the list of the registered business entities which have filed said tax incentives report.



2. RA 10708 mandates the BIR and BOC to submit to the DOF:
(a) the tax and duty incentives of registered business entities as reflected in their filed tax returns and import entries; and
(b) actual tax and duty incentives as evaluated and determined by the BIR and the BOC. The DOF shall maintain a single database for monitoring and analysis of tax incentives granted.

3. Further, the DOF shall submit to the Department of Budget and Management (DBM) the aggregate data on a sectoral and per industry basis of:
(a) the amount of tax incentives availed by registered business entities;
(b) the estimate claims of tax incentives immediately preceding the current year;
(c) the programmed tax incentives for the current year; and
(d) the projected tax incentives for the following year. The aforesaid data shall be reflected by the DBM in the annual Budget of Expenditures and Sources of Financing (BESF), which shall be known as the Tax Incentives Information (TII) section.

4. The NEDA is mandated to conduct cost-benefit analysis on the investment incentives to determine the impact of tax incentives on the Philippine economy. For this purpose, all heads of the IPAs shall submit to the NEDA the aggregate tax incentives, based on the submissions of registered business
entities and aggregate investment-related data, both on a sectoral or per industry basis, which may include, but not limited to, investment projects, investment cost, actual employment and export earnings.