The approved bill authored by Reps. Giorgidi Aggabao (4th District, Isabela) and Tomas Apacible (1st District, Batangas) is in substitution of House Bill 3992 filed by the former.
"I am very glad that the Committee on Ways and Means has approved the SNITS bill for individuals engaged in business or exercise of a profession. It will simplify tax audit even as it enlarges the taxable base for the aforementioned taxpayers. The bill should be a boon for the administration because it will increase tax collection without the enactment of new tax measures," Aggabao said.
The measure seeks the amendment of Sections 22, 24 and 34 of the National Revenue Code of 1997, as amended, for the implementation of the SNITS.
Aggabao said that taxes on income are a well-recognized exaction because of its contribution to support the government. However, he said the law allows the taxpayer to reduce his taxes by permitting him certain deductions.
"This is an area where discreditable evasion of the taxing laws occurs and where fraud on the revenue of the government happens," said Aggabao.
Aggabao explained the SNITS bill has three objectives namely: limit through specific statutory provisions, deductions to gross income of only eight allowable expenses; eliminate the sui generis deduction of "ordinary and necessary trade, business or professional expenses" such as traveling expenses, entertainment, amusement, recreation expenses and other wide variety of expenses that have spawned problems of drawing an exact line of demarcation between legitimate business expenses and personal expenses; and eliminate losses, bad debts, pension trusts and premium payments on insurance which are basically personal expenses.
Under the present law, Aggabao said deductions from gross income are permitted for 10 expenses namely: ordinary and necessary trade, business or professional expenses; taxes; losses; bad debts; depreciation; charitable contributions; research and development; pension trusts; and premium payments.
Under the SNITS bill, deductions from gross income shall be allowed for only eight expenses namely: salaries and wages; supplies and utilities; rentals; interests; taxes; depreciation; research and development; and charitable contributions.
Earlier, Finance Undersecretary Gil Beltran said the enactment into law of the SNITS and three other tax measures could generate an estimated P67 billion in revenues for the government.
Beltran said the revenue-enhancing measures are: excise tax reforms for tobacco, alcohol and petroleum products, P40 billion; rationalization of fiscal incentives, P10 billion; SNITS, P5 billion; and the packaged increase in the value-added tax (VAT) rate and lowering of the income tax, at least P12 billion.
source: Public Relations and Information Department
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