Finance Secretary Carlos Dominguez
File
Regional headquarters staff lose special tax rate under TRAIN
Mary Grace Padin (The Philippine Star) - January 16, 2018 - 12:00am

MANILA, Philippines — The Department of Finance (DOF) said employees of regional operating headquarters (ROHQ) would no longer enjoy special tax rates on their gross income under the new tax reform law.

In an interview, Finance Secretary Carlos Dominguez said the 15 percent special tax rate on the gross income of employees of ROHQs is no longer applicable after President Duterte vetoed the provision granting the preferential rate under the Tax Reform for Acceleration and Inclusion Act.

Dominguez issued the clarification after sectors expressed confusion on preferential rate on ROHQ employees.

“It is clear to us. We will tell them that our interpretation is that the (provision) is vetoed,” Dominguez said.

Finance Undersecretary Antonette Tionko said “the intention under the veto is to repeal. That’s the intention.”

Earlier, Duterte vetoed the provision in the tax reform law granting a special tax rate of 15 percent on the gross income of employees of regional headquarters, regional operating headquarters, offshore banking units, and petroleum service contractors and subcontractors.

Duterte said the provision violates the Equal Protection Clause under Section 1, Article III of the 1987 Constitution, as well as the rule of equity and uniformity in the application of the burden of taxation.

However, the Philippine Association of Multinational Companies Regional Headquarters Inc. (PAMURI) said there were two citations in the TRAIN law regarding the preferential tax rate.

The PAMURI said the President’s veto only applied to the second citation, which stated the tax perk would only be applied to ROHQs already existing before 2018.

“We don’t get into all those, whether the veto affects this particular line,” Tionko said in response.

Meanwhile, the Tax Management Association of the Philippines (TMAP) said the President’s veto on the preferential tax rate of ROHQ employees does not automatically remove the perks they enjoy as it does not amend Section 25 (C), (D), and (E) of the Tax Code.

The TMAP said the existing provision in the Tax Code needs to have a repealing clause for it to take effect.

According to Tionko, the repeal on the special tax rate of ROHQ employees only affects high-ranking employees earning P975,000 and up with managerial and technical positions.

“The ones that qualify for the 15 percent rate are those earning P975,000 and up, which is the high-earning people and they enjoy lower rates. So to be fair, that is the intention,” Tionko said.

CARLOS DOMINGUEZ III DEPARTMENT OF FINANCE PHILIPPINE ASSOCIATION OF MULTINATIONAL COMPANIES REGIONAL HEADQUARTERS INC. TAX MANAGEMENT ASSOCIATION OF THE PHILIPPINES TAX REFORM FOR ACCELERATION AND INCLUSION ACT
Philstar
Facebook
  • Latest
  • Trending
Latest
Are you sure you want to log out?
X
Login

Philstar.com is one of the most vibrant, opinionated, discerning communities of readers on cyberspace. With your meaningful insights, help shape the stories that can shape the country. Sign up now!

SIGN IN
or sign in with
Read and share the latest news
whenever and wherever you are.
Top Stories
Features the most relevant stories,
exclusive content, analyses and special reports.
As It Happens
Get bite-sized highlights and up-to-date
information as the news breaks.
Latest
View the most recent
stories of the day.
Log-in
Lorem ipsum dolor sit amet,
consectetur adipiscing elit.
Quisque justo est, auctor vel ullamcorper.
Log-in
Lorem ipsum dolor sit amet,
consectetur adipiscing elit.
Quisque justo est, auctor vel ullamcorper.
How to follow As It Happens stories
STEP 1
Click the story in the As it Happens section.
How to follow As It Happens stories
STEP 2
Click "Follow Story" for updates on the news.
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Aliquam eu metus vitae felis tincidunt finibus ut id sapien. Integer volutpat dui eu malesuada dignissim. Sed varius justo nulla, fringilla convallis sem porta sed.
How to follow Author
STEP 1
Click on the author's name in the article.
How to follow Author
STEP 2
Once you click on the author's name, you will be
brought to the Authors page. Click "Follow Author"
to stay updated on the author's works
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Aliquam eu metus vitae felis tincidunt finibus ut id sapien. Integer volutpat dui eu malesuada dignissim. Sed varius justo nulla, fringilla convallis sem porta sed.
How to follow Tags
STEP 1
Click on a tag in the article.
How to follow Tags
STEP 2
When you click on a tag, it will take you to the
dedicated tag page where you'll see the article
viewed, along with other stories with that tag.

Click the "follow tag" button to stay updated on
the topic.
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Aliquam eu metus vitae felis tincidunt finibus ut id sapien. Integer volutpat dui eu malesuada dignissim. Sed varius justo nulla, fringilla convallis sem porta sed.