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COMMITTEE ON WAYS AND MEANS
Video Conference via Zoom

• DATE

TIME
17 August 2022

8:31 A.M.

REP. JOEY SARTE SALCEDA CHAIRPERSON

REP. TEODORICO T, HARESCO, JR. PRESIDING OFFICER 1

REP. MIKAELA ANGELA B. SUANSING PRESIDING OFFICER 2

REP. SONNY "SL" L. LAGON PRESIDING OFFICER 3

REP. ALLAN U. TV PRESIDING OFFICER 4

MS. LORENA A. FERNANDEZ ACTING COMMITTEE SECRETARY

£101
 COMMITTEE ON WAYS AND MEANS
17 August 20221 ECR 11- 1

The meeting was called to order at 8:31 a.m.

THE CHAIRPERSON. Okay, it's 8:31. Good morning everyone. This first
meeting of the Committee on Ways and Means of the 19th Congress is hereby called
to order.
May I call on AGAP Party-List Representative, Congressman Nicanor B.
Briones of Batangas, to lead the prayer for this meeting. Congressman Briones.
REP. NICANOR B. BRIONES. Good morning, Mr. Chairman, Joey. Good
morning everybody.

• THE CHAIRPERSON. Good morning.

REP. BRIONES. Let's pray first. Okay, let.. .let us put ourselves in the most
holy presence of the Lord.
In the name of the Father, of the Son, of the Holy Spirit. Amen.
Almighty... Almighty Father, we thank you for this day on a chance to gather
on this hearing of the Committee on Ways and Means. We place our work and
ourselves into Your hand and grant us Your strength, guidance and wisdom to be
able to participate in today's discussion. May we have a purposeful discourse in the
end purpose of serving You and our people. Mayall of us remember our calling to
be of service to our constituents, the Filipino people.

•
We ask this in Your name, Jesus Christ, our Lord. Amen .
In the name of the Father, of the Son, of the Holy Spirit. Amen.
THE CHAIRPERSON. Amen. Good morning everyone. We would like to
recognize our Vice Chair... Vice Chairpersons, especially... individually, especially my
Senior Vice Chairperson, Mikaela Suansing, who will outshine her mother. Also,
other Members in the Zoom, especially our honorable secretary, Secretary of the
Department of Finance, Secretary Ben Diokno. Thank you for joining us, Your
Honors.
May I direct our Committee Secretary to recognize our Members and
thereafter our resource persons.
THE ACTING COMMITIEE SECRETARY. Good morning, Your Honors, Mr.
Chair. Right now we have... we have six Vice Chairs with us-Senior Vice Chair
Mikaela Suansing, Vice Chairs Nicanor Briones, Ted Haresco, Allan Ty, Sonny
Lagon, and Vice Chair Eric Go Yap. And for our Members, we have Representative
Lex Anthony Cris Colada; Representative Rodolfo "Ompong" Ordanes;
 COMMITTEE ON WAYS AND MEANS
17 August 20221 ECR 11- 2

Representative Stephen "Caraps" Paduano; and Representative Sergio Dagooc. We

also have Representative Arleen Brosas; Representative James "Jojo" Ang;
Representative Lordan Suan; Representative John Tracy Cagas; Representative
Allan ... Representative Ria Vergara; Representative Nicolas Enciso; Representative
Leody Tarriela; Representative Maria Carmen zamora; Representative Elpidio
Barzaga; and Representative Ron Salo. Right now po, we have 21 Members. So,
we have a quorum, Your Honors.
REP. FLORIDA "RIDA" P. ROBES. ComSec, ComSec, may I be recognized
also? This is Congresswoman Florida P. Robes. Thank you.
THE ACTING COMMITTEE SECRETARY. Apologies for that po. We have
additional Members here - Representative Ray Florence Reyes; Representative
Stella Quimbo; Representative Arnulf Bryan Fuentebella; Representative Marvey
Marino; and also our Vice Chair Ernesto Dionisio; Representative Ricardo Kho; and
my apologies, Representative Rida Robes; and Representative Rufus... Rods
Rodriguez; Representative France Castro, and also our Vice Chair, Representative
Nelson Dayanghirang; and Representative Marissa Del Mar; and also Representative
Jose Alvarez. We have 20... We have 33 Members, Your Honors, and all the Vice
Chairs are here. Our apologies po. For the senior... for the resource persons, may
we recognize them after the organizational meeting. Thank you.

•
THE CHAIRPERSON. Okay, thank you. So, with 40 of the 75 official
Members of the official limit for the membership in this Committee, we hereby declare
the presence of a quorum. And we have all the vice chairpersons present and
almost 30 of the 75... 30 of the non-vice... of the 68 non-vice, so... who have been
duly elected in the floor. The... 1 hereby declared that the Committee on Ways and
Means has been organized.
With that said, may I introduce the Members of the Committee on Ways and
Means not just those who are present but as declared in the... as part of the roster of
this Committee in the 19th Congress.
Secretariat, please share the screen of the Members of alL.of all the... of all
the Members of this Committee. Thank you very much.
So, we have Senior Vice Chair Suansing; Vice Chair Dionisio; Vice Chair
Dayanghirang; Vice Chair Ted Haresco; Vice Chair Sonny Lagon; Vice Chair Nicanor
Briones, for that beautiful prayer; Vice Chair Allan U. Ty; and Vice Chair EG
Yap... so... to whom I am most indebted.
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 COMMITTEE ON WAYS AND MEANS
17 August 20221 ECR 11- 3

Next.
And our Members include our neophyte Congressman from Quezon City,
Marvin Rillo; Congresswoman zamora; Congresswoman from Nueva Vizcaya,
Cuaresma; of course, the father of our Senior Vice Chair, former Commissioner
Horacio Suansing; my good friend Gus Tambunting of Paranaque, but I prefer the
wife, Joy; Congressman Cagas; Congressman Barbers, my good friend from way
back; my classmate in 1998, Congressman Marino; my good friend from the
Committee on Reorganization, Congressman Suan of Cagayan De Oro City;
Congressman Rufus Rodriguez, also my good friend; Congressman Ria Vergara; of

•
course, the brother of my classmate in Management Engineering, Congressman
Pepito Alvarez, probably the richest Congressman; Congressman Salo, my good
friend in many... many advocacies; Congressman Arnie Fuentebellla, fellow Bicolano;
Congressman Pidi Barzaga; Congressman Caoagdan; Congressman Gorriceta,
who's concerned to have a bridge between Iloilo and Guimaras is duly noted always.
Next.
And now we must. .. help us find funding for that. Congresswoman
Salimbangon; Congressman Ray Florence of PL AnaKalusugan; Congressman Arjo
Atayde. Actually should be... he is representing me... when 1... when I was in college I
stayed in his district, Congressman Amatong. Probably a son of my good friend,
former DOF Secretary Amatong; Congressman Ordanes, my good friend and fellow
Tuesday Club member; Congressman Richard Kho, fellow Bicolano from Masbate.
We have Congressman James Ang of PL Uswag 1I0nggo; Congressman Vargas-
Alfonso of Cagayan. One of the best dressed in this Congress, Congressman Rida
Robes. How can you miss her? She is the... quite the organizer. And, of course, the
esteemed colleague, one of the intellectual giant of Congress, Stella Quimbo;
Congressman Leedy F. Tarriela.
Pasensya na po kung hindi ko kayo nalalagyan ng adjective. Ibig sabihin
hindi ko pa kayo masyadong kilala. And, of course, my good friend, Congressman
Bascug, whose presence always gives me a quorum in the past Congress and
Congressman Midy Cua, of course of the... of my good friend, the Cua family of
Quirino
Next.
And we have Congressman Paduano, our former Minority leader;
Congressman Nicolas Enciso, fellow Bicolano of Bicol Saro; another Bicolano, my

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 COMMIITEE ON WAYS AND MEANS
17 August 20221 ECR 11- 4

good friend whose father is a really good friend, Congressman Ruds ... Attorney Ruds
Gutierrez; Attorney of PL OFW, Marissa Del Mar Magsino; and, of course, fellow
advocate, Congresswoman Arlene Brosas. Again, somebody who always gives me
quorum for... for his never ending presence in all Committee hearings, Congressman
Dagooc. Again, another Bicolano, Congressman Wilbert Lee of PL AGRI. And
again, another good friend of party... Party-List GP, GP Padiernos.
Next.
And, of course, we have the... Ex-Officio Members starting from our speaker
down to our... all our Deputy Speakers.

• Next.
And, of course, our Ex-Officio Members from the Majority Leaders-Majority
Leader Mannix Dalipe; and our Senior Deputy Majority Leader, Sandro Marcos, who
actually trained in this Committee in the last Congress when he was chief-of-staff of
this... the current speaker and ... and of course, the rest.
So, next.
And, of course, Congressman Abante, of course, another Bicolano.
Next.
And these are our Ex-Officio Members from the Minority Leaders-Minority
Leader Marcelino Libanan who is my classmate from the first. .. first time I went into

•
politics; and Paul Daza, who is a fellow investment banker.
And then next.
Sorry kung may... and of course, our... kailangan gawin mo talagang Ex-
Officio 'to sa Committee on Accounts, lalong-Ialo ng kung magpe-face-to-face na
tayo, kailangan nating gumastos. Anyway, no, thank you very much Yeda for the
never ending support.
So, those are the Members of this Committee. So, at this point, may I present
as a matter of... of procedure of the 19th Congress Committee on Ways and Means
Rules and Procedures. This is based on almost all rules since I've known ... I've been
in this Congress and which has been passed on and on. And may I, please, at this
point, offer the same rules to everyone for their possible review if they wished so.
But in the meantime, may I seek the generosity of this ... of this new Committee that
we adopt it as our interim rules. Secretariat, please show the rules as we have
adopted in prior Congresses and prior Committees of the Committee on Ways and
Means.

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 COMMITTEE ON WAYS AND MEANS
17 August 20221 ECR 11- 5

Next.
So, this is our jurisdiction - All matters directing ... fiscal and monetary and
financial affairs of the national government. Although we've not been ... there is an
overlap on the monetary with the Committee on Banks including tariff, taxation,
revenue, borrowing, credit, and bonded indebtedness. So, that includes, of course,
our national treasurer.
Next.
So, the Duties and Functions. Unlike other Committees who can easily pass
their measures, we... this Committee has very specific task given by the Constitution

• because all taxes should originate from Congress. And this Committee is... has been
chosen by Congress precisely to do that constitutional functions so, we need to be
more cautious even in the use of rules that may facilitate the approvals. But still we
want to go through so that the people are well-informed and ... of the decision-making
process that we have adopted in order to come up with tax policy as well as the tax
measures.
Next.
So, Membership and Officers of the Committee.
Next.
Actually, in prior Congresses, we actually adopt. .. sometimes we... as we go

•
along as the new measures come in, we might. .. we might and I think we will most
likely form several subcoms of which our seven vice chairs will be asked to head.
But at this point, I think it may suffice that as we acquaint ourselves with the
workings as well as not just the tone but the content that we are being entrusted by
the... by the country, by this nation through the Constitution and through this
Congress, through this Committee, then I think we may be able... the only way to do
that is through the formation of subcommittees eventually in order to focus... give
more focus to more in depth focus and...to the measures that are being referred to
this Committee.
So, may I, at this point, ask our Members if they have any concern on the
rules that they wish to discuss? As a matter of protocol, may I call the Minority first
before I call on the Majority. Dagooc.
REP. SERGIO C. DAGOOC. No further discussion on the rules, Mr. Chair.

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 COMMITTEE ON WAYS AND MEANS
17 August 20221 ECR 11- 6

THE CHAIRPERSON. Thank you very much. So, may I now call on my most
beautiful, the most beautiful graduate of Harvard University, Senior Vice Chair
Monica (Mikaela) Suansing for... for a manifestation.
REP. MIKAELA ANGELA B. SUANsING. My Chair, I respectfully move for
the approval of the Rules of Procedure of the Committee on Ways and Means.
REP. RON P. sALO. Second the motion.
REP. MICHAEL B. GORRICETA. Second the motion.
THE CHAIRPERSON. Thank you. Is that Ted Haresco, Gorriceta and Salo?
So, with those... are there any objection? Hearing none, the motion is duly seconded

• and being there no objection, the Rules of Procedure of the Committee is hereby
approved on an interim basis. So, we adopt the rules of the 18th Congress of the
Committee on Ways and Means as our rules in the meantime.
Now, let me call on ... let me now just say a few words on our... usual
Chairman's message.
Good moming colleagues. I am pleased to see the Members of the
Committee have robustly represented today. The message is simple - brace
yourselves - because I think we have work to do. As the Committee is responsible for
all matters directly and principally relating to the lifeblood of this... of the State and
therefore of this nation, the State being the principal mover and agent for change, it is

•
our duty to enact laws that will steer the country towards an inclusive, resilient and
high growth path. Our journey towards fUlfilling this mission has set the road block
due to the economic scars of COVID-19 pandemic and the external shock principally
with the slowdown in China and uncertainties relating to the monetary policy in the
US. So, despite these challenges, I remain confident just like the entire 10th
Congress has already approved, a pioneering instrument that I have not seen being
an alley since 1987. The first medium term fiscal plan being approved as a
guiding ... as a guidance to this Congress the workings of this Congress at least for
the next three years, which is, of course and that... that essentially includes the
medium term fiscal framework targets. This has been accepted by the markets. Since
this was approved, the market went up by 700 basis points which almost like a bomb,
a kick, how do you call that? A Seal of house... Good Housekeeping by the market.
And more than that, on the credit side, our biggest varying which is the 10-year bomb
went down by 96 basis point one week after we approved the MTFF showing that it is
not only viable but the markets like what they are seeing. These goals are socially
'). ;
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 COMMITTEE ON WAYS AND MEANS
17 August 20221 ECR 11-7

desirable and desirably ambitious and we can help if we proactively deliberate and
swiftly pass the legislation as well as pursue our oversight powers conscientiously
especially in tax enforcement as well as tax collection efficiency.
In the last Congress, we've passed five key fiscal measures-CREATE, which
is the largest fiscal stimulus for businesses in recent history; RA 11590, which
provided the taxation of Philippine Offshore Gaming Operations which is now reviving
RA 11467, which increased the excise tax on tobacco, alcohol and vape and to
primarily fund the Universal Health Care Program which again may need later
support at certain point during this Congress; RA 11569, which extended the ease

• tax amnesty which radically increased the liquidity of our real property market as
those that previously were afraid of paying the estate taxes. Suddenly the
inheritances and all the others were again were... were titled on their... not on their
beneficial. .. (/naudible) but to their actual owners. And, of course, RA 11636, which
clarify the income tax giving relief to those that suffered a lot from the pandemic
principally a propriety... proprietary or private educational institution and hospitals.
Next.
Ena, can you show the data driven approach that we have used with respect
to how this Committee essentially works?
So, this is the data-driven approach to tax policy that has guided. First thing
is, every time there is measure that is referred to this Committee, the first thing we

• look at is the family and income expenditures survey. We want to know who will pay.
Second, we require from the OOF for all measures a dynamic stochastic general
equilibrium model to show the impacts, at least give us a feel of the impacts or the
direction, not necessarily the magnitude of the impact of this tax measure on the
overall economy, GOP, employment, and inflation. We have used that for all the
measures that we have approved. Third, why every proposal should be based on
cost and benefit analysis, and usually the TIMTA has been very useful especially
in ... for example, in the... in the formulation of CREATE. And number four, is
comparative practices in other countries which will guide us again now on how to
essentially tax digital transactions. And number five, we almost also want to know
what if things go wrong or what things can go wrong? So, we always ask for a
contingency analysis.
So, this 19th Congress, we will pursue, of course, the passage of... we will
support the administration of our president, President Bongbong Marcos, as he has
 COMMIITEE ON WAYS AND MEANS
17 August 20221 ECR 11- 8

identified in his pronouncement during the inaugural, during the SONA as well as
other policy pronouncement in support of those... of the national goals that he has
pronounced during these two basic... as well as, of course, the policy pronouncement
of our principal partner which is the Department of Finance. Among this priority
measure is passive income and financial intermediary taxation.
Again, for the benefit of our neophytes, and I think half of our Members are
neophyte, PIFITA has been approved twice on Third Reading already. So, of course,
there are new measures that are coming out that are in line with PIFITA and the
Committee is ready to essentially consider them as we have discussed them quite

•
thoroughly. Second is the bulk on digital service. It was approved on Third Reading
in the past Congress. Third is the excise tax on plastic bags which was approved
also twice already on Third Reading. And fourth is the fiscal regime for mining
industry which was approved again twice already on Third Reading. SO... and of
course, the ease of paying taxes which has been nominated by all the business
groups, the Joint Foreign Chamber of Commerce as their number one priority for this
Committee.
Today, we will be considering four of these five measures. I count on you, my
colleagues, to be one with me in fulfilling our constitutional duty that was entrusted to
us by the 19th Congress. Before we commence with the work, we look back... let us
look back on the measures that we work on ... no more... not anymore. We have done

• that.
We are given this immense responsibility to ensure that the lifeblood of the
State remains to be not just sufficient but to move the country forward beyond not
just surviving or overcoming the economic cry of the pandemic but as well as the one
that our President has said especially AmBisyon 2040, Pagtanaw 2050, as well as, of
course, what I think am anticipating ... what... how the Philippine Development Plan
will emerge as the President has already instructed NEDA and the Economic Team
to forge and we must be ready to supply the resources needed in order to achieve
that.
So, committed to this mandate, the Committee has reported 74 laws since 8th
Congress. During the last Congress, we approved 87 measures. Out of these, five
became... five were of national significance were signed into law. In line with this
mandate to act on revenue provisions of all measures, the Committee approved the
provision on tax, fiscal incentives, user fees and charges of 700 House Bills and 5
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COMMITTEE ON WAYS AND MEANS
17 August 20221 ECR 11- 9

House Resolutions. And while the President likes to veto, we have actually on our
own, not vetoed but did not complete the 187 bills that would have degraded the
revenue-based of our nation's state. And keeping in mind that we have a sacred duty
of ensuring that the State, being the principal agent of change for good in this
country, the Committee also conducted investigation in the performance of our
oversight mandates with the... with the help of our stalwarts, Senior Vice Chair Ging
Suansing, Vice Chair Sharon Garin, Representative Koko Nograles and, of course,
our... our Appro Senior Vice Chair Stella Quimbo. The Committee pursued increase
on smuggling of fake cigarettes repeatedly; smuggling of agri prodUcts almost

•
incessantly; smuggling of customs bonded warehouse; and investigation into oil
companies utilizing CBWs for the importation of petroleum products. We expect to
exceed our past performance this 19th Congress. We must match the 62 percent
mandate given to this new President which I'm sure that the PDP will not just. .. that
will essentially flesh out the eight-point program that was announced pre... post
SONA and this Committee is here prepared in order to support that.
So, as shown, the only remaining CTRP component assigned to us is
Package 4 of the CTRP or the passive income and financial intermediation or
PIFITA.
At this juncture, with the permission of our... of our Members, we would like to
ask if our Members have any question before we proceed to hear our resource

• persons. Or would you rather... So, may I suggest that we'd rather hear our resource
persons. So, at this point, we are most benefited by the presence...
THE ACTING COMMITTEE SECRETARY. Sir... Sir.
THE CHAIRPERSON. Yes.
THE ACTING COMMITTEE SECRETARY. Sir, is it possible to acknowledge
the resource persons and the additional Members who are here, Sir?
THE CHAIRPERSON. Okay. Madam ... Madam ComSec, please do.
THE COMMITTEE SECRETARY. Sorry, Sir.
THE CHAIRPERSON. But may I warn DOF Secretary Ben Diokno that he will
be on stage already.
THE ACTING COMMITTEE SECRETARY. Yes, Sir. Okay po. Your Honors,
we also... upon the authority of the Chair, we also acknowledge the presence of
Representative Marvin Rillo; Representative Michael Gorriceta; Representative
Ralph Recto; Representative Wilbert Lee; Representative Jose Gay Padiernos;
P10
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 COMMITIEE ON WAYS AND MEANS
17 August 20221 ECR II - 10

Representative Juan Carlos Atayde; Representative Midy Cua; and Representative

Stella Luz Quimbo. There are 41 Members in the Zoom right now.
For our resource persons, we are fortunate to have Secretary Benjamin
Dikno; Usec Maria Editha Tan; Usec Antonette Tionko; ASec Dakila Napao; Director
Nina Asuncion; Director Bai Jam Disomimba; Director Ronalyn Jaectin; Director
Rowena Sta. Clara, all from the Department of Finance. We also have Ms. Dani
Carreon; Mr. Isidro Dela Cruz, III; Ms. Cherry Mae Gonzales; Ms. Alexa Jimenez; Ms.
JUdy Lascano; Mr. Eastword Manlises; Mr. Eldrich Dave Marquez; Mr. Martin Perez;
Mr. Mike Saulo, all from the Department of Finance-Legislative Liaison Office. From

•
the BIR we have Commissioner Lilia Guillermo herself. We are told that DepCom
Romeo Lumagui is also coming and I think Attorney Althea Acas is also in the room;
also Attorney Brianna Kay De Los Santos of the Bureau of Internal Revenue. From
the Bureau of Customs, our Commissioner is indisposed. We have... but we have
Assistant Commissioner Vincent Philip Maronilla; DepCom Edward James Dy Buco.
From the DTI we have ASec Ann Claire Cabochan; Ms. Norma Arpafo; Ms. Marietta
Trimpe; Ms. Marie... Maria Anne Lorraine Doong; Mr. Rey Lignis; and Ms. Bea
Hernandez. From the DENR, we have Secretary Maria Antonia Loyzaga herself;
ASec Daniel Daruis Nicer; Usec Anna Teh; Attorney Andrea Cabagbag; Ms. Fatima
Millan; Mr. Nehemiah Leo Salvador; Ms. Agnes ... and Ms. Agnes Tadeo. From the
PCSO we have Chairperson Junie Cua; Attorney Gay Nadine Alvor; Attorney Fulvio

• Dawilan. From TMAP, we have Attorney Michael Garcia. From Asia Cloud
Computing Association, we have Benson Koh. From Google, we have Attorney
Michael Garcia, and from Fintech, we have Imelda "Ida" Tiongson. From Lazada, we
have Attorney Norman Roland Ocana, III; and Ms. Keila Garcia. From Sea Group or
Shopee, we have Attorney Jammie Hans-Segovia. From Bankers Association of the
Philippines, we have Mr. Antonio Moncupa, Jr.; Mr. Benjamin Castillo; Ms. Chona
Reyes. From Philippine Insurers and Reinsurance Association or PIRA, Attorney
Stephen Andy Olazo and Mr. Greg Barrios. From Trust Officers Association of the
Philippines, we have Mr. Steven Te; Ms. Reena Marie Franco; Ms.
Christine... Christianne Alonzo-Velasco. And Packaging Institute of the Philippines,
Ms. Virginia Robledo. And from the Philippine Plastic Industry, we have Mr. Aaron
Lao and Mr. Mason Ang. From Philippine Retailers Association, Ms. Rosemarie Ong
and Attorney Paul Santos. We also have Mr. Bobby Claudio and Ms. Mayan Sangil.
From Universalis, we have Mr. Brian Doce. n11
_., .....a

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 COMMITTEE ON WAYS AND MEANS
17 August 20221 ECR 11- 11

Your Honors, those are all of our resource persons. Good morning.
THE CHAIRPERSON. Thank you. Una, dapat sana hybrid ... dapat sana
hybrid po tayo kaso inubos ng Appro lahat ng kwarto. So, after sa... So, hindi naman
sa... because right now I'm sure some of our Members should know that DA is
already there to look into the our constituency concern as already policy issues. I
don't know where in ... in any of because all the rules are essentially being occupied
by their Appropriation's Committee in their new approach in order to facilitate the
approval of the budget essentially. And second thing is, huwag na ho muna nating
pag-usapan sana kasi iyon nga ang concern ko, baka mape-preempt ko 'yung

• presentation ng DBCC to the Committee on Appro. But I think as a matter of

procedure and tradition, we always, of course, should take guidance from our
counterpart in the Executive, especially the DOF, BIR, BOC, PAGCOR.
PAGCOR I think has no officers yet as well as PCSO since they are the ones who
But

generate revenues for this government. And after Secretary Diokno's remarks, may I
also ask Secretary Yulo to deliver any remarks she has prepared for us to allow her
to take her leave should she be in an important commitment thereafter. I am saying
that because she was my classmate in Ateneo so she has special place in my heart.
So, anyway, may I now recognize Secretary Ben Diokno for the presentation
of the priority measures of the DOF. Thank you very much. Secretary Ben Diokno.

•
MR. BENJAMIN E. DIOKNO (Secretary, Department of Finance). House
Committee on Ways and Means, Chairperson Joey Salceda; Senior Vice Chair
Mikaela Suansing and honorable Representatives present today, good morning.
First of all, I'd like to express our sincerest gratitude to the House of
Representatives for passing key changing tax reforms in the 18th Congress. The tax
reform laws you have enacted have deep brought the Philippines into the company of
the world's fastest growing economies. When the pandemic struck and stalled our
economic growth, these laws were a critical factor in maintaining fiscal sustainability.
The Philippines' solid macroeconomic fundamentals being forced by structural
reforms enabled us to withstand the harsh effects of the pandemic and chartered the
path to recovery. The Tax Reform for Acceleration and Inclusion Law or TRAIN
corrected the long standing inequity of the income tax system. It lowered the
personal income tax rates of individuals. It simplified the estate and donor's taxes. It
expanded the value added tax base, adjusted the oil and excise taxes,and introduced
excise tax on sweetened beverages. p1)
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 COMMITTEE ON WAYS AND MEANS
17 August 20221 ECR 11- 12

Since 2018, TRAIN has raised 476 billion pesos in additional revenues to
fund the government's infrastructure, social, and health care programs. Meanwhile,
the Tax Amnesty Act allowed erring taxpayers to affordably settle their outstanding
tax liabilities while providing the government with more revenues for its priority
programs. From 2019 to 2021, total additional collections from its measure reached
14.6 billion pesos. The increased excise taxes on same products, such as alcohol
and tobacco, were aimed to discourage the consumption of these unhealthy foods
while ensuring funding for the Universal Health Care Program. These measures
raised a total of 85 billion pesos in incremental revenues from 2020 to 2021. Overall,

• total tax intake from the enacted tax reform measures amounted to 578 billion pesos.
Past last year, the Corporate Recovery and Tax Incentives for Enterprises Act or
CREATE is considered as the most significant fiscal stimulus for businesses in our
recent history. It provided an immediate corporate income tax cut of 10 percentage
points for domestic, micro, small, and medium enterprises and 5 percentage points
for all other corporations.
In addition, it promoted the tax incentive system that is performance-based,
time-bound, targeted, and transparent. The tax incentive system under CREATE
balances the interest of all stakeholders while remaining faithful to the fundamental
principles and mindful of the country's ... (Inaudible). With CREATE, ... (Inaudible)

•
confidence has continuously improved. Last year, our foreign direct investment
inflows reached a record high of 10.5 billion U.S. dollars. And for the first five months
of this year, the foreign direct investment inflows already amounted to 4.2 billion U.S.
dollars, up by 19 percent from previous year's level. In terms of our fiscal
performance, government revenues posted a double-digit growth of 16 percent
during the first half of 2022 compared to the same period in 2021. Both tax and non-
tax revenues posted double-digit growth of 15 percent and 27 percent, respectively.
Tax collections from revenue generating agencies all posted positive growths
stemming largely from the full reopening of the domestic economy. Total actual
revenues from January to June exceeded the target collection by five percent. Tax
collections, on the other hand, were also slightly above target by 0.2 percent.
Now, the latest fiscal ratios show that we are on track in achieving our
revenue and tax effort targets for the year. For the first half of the year, our revenue
effort for the share of total revenues in GOP reached 16.7 percent. This is
significantly higher than the full year target of 15.3 percent of GOP. Revenue effort

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 COMMITTEE ON WAYS AND MEANS
17 August 20221 ECR 11- 13

for the second half of the year has to be at least 13.7 percent of GDP to achieve the
full year target. And based on historical data, this is doable. Meanwhile, tax effort or
share of tax revenues to GDP reached 14.9 percent as of the first half of 2022. This
is higher than the full year target of 14.5 percent and it is already at par to the pre-
pandemic level. This sends strong signal of economic recovery for the country. The
tax effort has to reach at least 14.1 percent of GDP for the second half of the year to
achieve this 2022 target. While we are reaping the benefits of the structural reforms
passed and the solid macroeconomic fundamentals left behind by the Duterte
Administration, the operating economic environment remains uncertain and difficult.

• Inflation is expected to remain elevated for as long as world crisis of oil and other key
commodities remain high. The effects of the pandemic linger while the global political
economy remains unpredictable. But we are fUlly prepared to address the ongoing
risk and challenges. The economic team is committed to implementing a medium
term fiscal framework that will serve as our blueprint to reduce fiscal deficit, promote
fiscal sustainability, and enable robust economic growth. The framework proposes
measures that will improve tax administration, enhance the fairness of efficiency of
our tax system, and promote environmental sustainability to address climate change.
The bureaus having directed to fast track the digitalization of our revenue and custom
systems, to boost our tax effort, simplify tax administration and eliminate discretion.

•
In addition, we will work for the passage of the remaining tax reform packages of the
Duterte Administration along with other key policy measures that will help accelerate
our recovery. The proposed measures of the Department of Finance indude the
Real Property Valuation and Assessment Reform Bill. This aims to broaden the tax
base used for property and property-related taxes of the national and local
governments. The measure mandates the adoption of internationally-accepted real
property valuation standards, rationalization of the process of valuation, and
establishment of a single valuation-based for taxation. The bill started to enactment
will help the LGUs in optimizing revenue collections which in turn will promote
genuine local autonomy.
Next is the Passive Income and Financial Intermediary Taxation Bill or
PIFITA. PIFITA is aimed at making the taxation of passive income, financial
intermediaries and financial transactions simpler, fairer and more efficient. PIFITA
mandates the reduction in the number of tax rates of passive income and financial
intermediaries. We will also pursue the imposition of VAT on digital goods and
 COMMITTEE ON WAYS AND MEANS
17 August 20221 ECR 11- 14

services. This is aimed at leveling the playing field between traditional and digital
businesses. This bill clarifies the goods or properties including digital or electronic in
nature and services including those rendered electronically are subject to VAT.
Next.
We have the proposal to impose excise tax on single use plastic bags as part
of the government's climate mitigation efforts. The bill proposes to impose a 20-peso
excise tax per kilogram of single use plastics removed from the place of production or
released in the custom's house.
Finally, we have a proposal to rationalize the mining fiscal regime. This will

• encourage full public disclosure on extractive industry and increase government

share by imposing a single fiscal regime applicable to all mining elements.
Department of Finance also supports the passage of the Military and Uniformed
Personnel Pension Reform Bill, the Capital Market Development Bill, the Livestock
The

Development and Competitiveness Bill, and the bills introducing amendments to the
Land Bank and the Philippine Crop Insurance Corporation charters.
Our fiscal consolidation strategy will bring down our debt to GOP ratio from
the current 62.1 percent to less than 60 percent by 2025. It will cut the deficit to GOP
ratio from the current 6.5 percent to 3 percent by 2028. The implication is clear. We
do not have to borrow as much as we did during the crisis. At the same time, we will

•
continue to boost domestic and economic activity with our massive infrastructure
investments equivalent to five to six percent of GOP annually. The economic team
commits to work closely with Congress and all stakeholders to transform the
Philippine economy and turn our socio-economic priorities into reality. We will work
as one in building a robust economy for a faster, greener, and more inclusive growth
that benefits all Filipinos.
Thank you very much.
THE ACTING COMMITTEE SECRETARY. Sir Joey.
THE CHAIRPERSON. Toni Yulo. You requested to be recognized ahead.
Wala naman. Ena, wala na si Toni?
THE ACTING COMMITTEE SECRETARY. Sir, we can call Commissioner
Guillermo first.
THE CHAIRPERSON. Now... Yeah. So, we will... kung ... pakiusap po namin
kung sana patuloy-tuloyin natin itong apat, except that isisingit sana namin si. .. si

p1j
 COMMITTEE ON WAYS AND MEANS
17 August 20221 ECR 11- 15

Toni Yulo. Anyway, so may I now recognize the digital queen, BIR Commissioner
Lilia Guillermo.
MS. LILIA CATRIS GUILLERMO (Commissioner, Bureau of Intemal
Revenue). Honorable Chair Joey Salceda, Senior Vice Chair Suansing,
distinguished officers and Members of the...this Committee, House Committee on
Ways and Means, my boss, DOF Secretary Ben Diokno, colleagues in government,
good morning everyone.
May I have my presentation?
THE CHAIRPERSON. Yes, please.

• MS. GUILLERMO. Okay. I have the pleasure to brief this Committee on the
plans and programs of the BIR for 2022 as well as its recent accomplishments with
this agenda item - BIR collection performance; tax collections from major tax reforms;
our C... 22 priority programs and projects; and of course, the BIR digital
transformation journey; and the initial accomplishments during this journey.
Next slide, please.
I'm grateful to inform that despite the pandemic, the men and women of the
BIR achieve their collection targets in 2021. For the first semester of 2022,
we're... we're still below target as of this date. But for the next semester of 2022, we
commit to surpass this goal by at least 20 percent. Before COVID-19 pandemic, BIR

•
had a total collection of 2.2 trillion which ... which 96.26 percent of the 2.27 trillion for
the year and translated to 11.2 percent tax effort. In... in 2020, BIR enormously
exceeded its target of 1.6... 1.7 trillion with a revenue collection of 1.9 trillion. In 2021,
the Bureau collected 2.1 trillion, surpassing the 2.8... 2.86 trillion, surpassing 2.081
trillion by 5 billion and recorded a 10.75 percent tax effort. As of June 2022, BIR
revenue collection amounted to 1.136 trillion which is 77 billion lower but corresponds
to an 11 percent tax effort.
Next slide, please.
For... Next slide. Anyway... BIR collections come mostly from income taxes
on income and profit, accounting for 53.3 percent of total revenue. Halfway through
2022, income tax has reached 606 billion covering more than half of the total BIR
collections. Next to income tax is VAT accounting for 19.7 percent and as of June
2022, VAT collection has reached 224 billion. That is already more than half of its
usual level since the pre-pandemic year of 2019. Significant amount of collection also
comes from excise taxes at 13 percent. For the first half of 2022, excise taxes
n16
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 COMMITTEE ON WAYS AND MEANS
17 August 20221 ECR 11- 16

totaled 149 billion. Percentage taxes and other taxes brought in 56 billion and 101
billion collection for January to June of 2022 respectively. One strategy...
Next slide, please.
... we will focus on is to analyze... For this slide we are saying that we still
have to collect 619 income taxes... billion income taxes; 277.39 billion value-added
tax; 199.28 billion excise taxes; 80.60 billion for percentage taxes; and other taxes of
125.48 billion. We will for the rest of 20... we will exert best efforts to collect these
amounts. One strategy we will focus on is to analyze the negative performance of
various industries like automobile, cement, construction ... yeah, petrOleum, power

• and real estate. We will formulate creative ways of addressing the slow performance
of these industries.
For my next slide. These are the tax collections from major tax reforms. Of
course, our Secretary also gave data on such so...
Next slide, please.
For the TRAIN ... for the TRAIN Law, the... it provided income tax cuts from
majority of individual taxpayers. However, this was offset by various revenue
generating provisions such as increase in excise taxes on tobacco, petroleum,
mining products, taxes on sweetened beverages, and increase in doc stamps. As
such, the TRAIN Law generated net increases in revenue since it

•
implement... since... since its implementation in 2018 which ... except in 2020,
it's it's... it registered a decrease of 31.6 mainly due to the effect of the pandemic
of on revenues in general.
The Sin Tax Law promulgated under RA Nos. 11346 and 11467 increased
excise tax rates on tobacco and alcohol products. Being a purely revenue... revenue
generating measure, the Sin Tax Law provided additional revenues amounting to 32.
4 billion; 54... in 2020; 54.9 billion in 2021; and 27.2 billion in the first half of 2022.
Under the CREATE Act intended as a fiscal's stimulus measure, the law reduced
corporate income tax rates in varying percentages. It also provides other tax relief
measures that will help businesses recover from the effects of the COVID-19
pandemic. Therefore, there is a decrease in corporate income tax collections arising
from CREATE to 68 billion in 2021 and in the first half of 2022. Taken as a whole,
the... the tax reform packages so far implemented have generated a net increase in
revenues of 16.9 billion.
My next slide is on collections from POGO. n11
 COMMITTEE ON WAYS AND MEANS
17 August 20221 ECR II - 17

THE CHAIRPERSON. Wow.

MS. GUILLERMO. In 20 ... ln 20... Yeah. In 2019 and 2020, BIR was able to
collect 6.42 and 7.18 billion, respectively, from POGOs through close monitoring of
their compliance by a taskforce on POGO operations. Collection in 2021 decreased
to 3.91 billion mainly due to the gambling track down of the Chinese government and
a temporary restraining order issued by the Supreme Court on the implementation of
various revenue issuances on POGOs that affected collections up to the third quarter
of 2021. With the enactment which took effect in 2021, collections from POGOs
started to pick up in the fourth quarter of 2021. Latest figures show that 1... 1.55

• billion was collected from POGOs for the first quarter of 2022.
In the next slide is the collection from Tax Amnesty Program. The Tax
Amnesty Act pursues to provide one time opportunity to settle estate tax obligation
and give reasonable tax relief to estates with deficiency estate tax and enhance
revenue collection by providing a tax amnesty on delinquency. Since its inception in
2019, the Tax Amnesty Program has generated 14.5 billion from 105 thousand
availers. The amnesty on delinquencies ended in June 2021 with 6,236 availers
paying about 8.2 billion. Amnesty on estate tax which will continue until June 2023
so far generated 6.3 billion from 99,395 availers.
Next slide, please.

•
My third topic is on the priority programs and projects of the Bureau of
Internal Revenue. The continuing efforts in implementing these various programs
pave the way for the achievement of targets mentioned in the previous discussion.
We subdivided our programs into three-enforcement programs; tax compliance
monitoring programs; and enhancement of administration and support services
programs. We have Run After the Tax Evaders Program; Oplan ... under enforcement
Oplan Kandado; broadening of the tax base; intensified audit and investigations....

(MS. MA. LUISA M. RAMIREZ TOOK OVER)

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 COMMITTEE ON WAYS AND MEANS
17 August 2022 / MLMR /11 - 1

MS. GUILLERMO. (Continuing) ... audit and investigations. On Tax

Compliance Monitoring Programs, we provide innovative... innovating taxpayer's
experience and SIR service processes; streamlining of creditable withholding tax
rates; re-architecture and enhancement of eSubmission; re-architecture and
development of the eFiling System; taxpayer awareness; integration of alcohol
industry in the Enhanced Internal Revenue Stamps Integrated System.
For the enhancement of administration and support services, we have
nationwide SIR payroll system; expedite the recruitment of new personnel and
promotion of qualified employees; strengthen budget management; aligning policies to
a SIR digital workplace; Integrity Management Program; and enabling the digital

• backbone of SIR.
Let me give you certain accomplishments of some of these projects. So,
despite the pandemic for the Run After Tax Evaders, which emphasizes the criminal
nature of tax evasion, in order to have a maximum deterrent effect on taxpayers,
thereby enhancing voluntary compliance and promoting public confidence in the Tax
System. We have, in this slide, a total of... in 20... 2019,309 cases; 2020,157; 2021,
137; and the 1st Semester of 2022, we have filed these number of cases with DOJ.
And we also filed with... filed with the CTA is an average of 30 cases and aggregate
liabilities as shown in the slide.
For the Oplan Kandado Program, the Oplan Kandado enhances voluntary

•
compliance and increase revenue collections through temporary closure of business
establishments. And in 2019, we closed 755; in 2020,247 establishments; 2021, 574;
and 2022, 172 for the 1st Semester. And in this slide, we collected an approximately,
an average of 1 billion pesos.
On the broadening of tax base, we simplified taxpayers' compliance and
increase the number of active registered taxpayers/businesses through the tax
compliance verification drive and the use of third-party information. And, in the slide,
you will notice that we have an increasing number of registered business taxpayers
where the increase is approximately around 8 percent more than the existing. In 2022
alone, 1st Semester of January to June, 369,617 are newly registered in our database.
The last is the tax compliance verification drive. It addresses the erosion of
income taxes arising from the use of spurious 2307 and late remittance of withholding
taxes. It also provides taxpayers additional option to transact one-time transactions,
particularly on the sale of real property subject to capital gains and doc stamps,
anytime and anywhere, address major systems performance issues of the
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 COMMITTEE ON WAYS AND MEANS
17 August 2022/ MLMR /11- 2

eSubmission facility to enable it to accommodate other prescribed reports and

immediately identifying and managing potential issues/problems in frontline
transactions that could give rise to taxpayer complaints. So, again, on the slide are the
number of establishments visited and some amount of collections for... we have...
revenues we have collected.
Now, for my last, but most important topic, may I present the SIR Digital
Transformation Journey. This program aims to transform the Sureau of Internal
Revenue into a data-driven organization through a digitally empowered and resilient
workforce utilizing reliable, scalable, and robust digital technologies and infrastructure
to innovate SIR services and elevate taxpayer experience.

•
The Digital Transformation Program has four pillars. First, is strengthening the
SIR organization. Second pillar, is modernizing the digital backbone of SIR. Third
pillar, enhancing policies, governance and standards. And fourth pillar, is the eleva...
elevating taxpayer experience and innovating SIR services.
For the first pillar of strengthening the SIR organization, enhancing... which
enhances the human resource capabilities and internal processes to provide highly
efficient and effective administrative and support services. So, in this pillar, we have
organizational restructuring aligned to our digital transformation, learning and
capability building using SIR eLearning platforms where moral transformation is an
objective of learning ... of the learning programs; Performance Management and
Rewards and Recognition System; Personal Information and Administrative Systems;

• Property Management Systems; and Accountable Forms Management System.

In pillar number two, modernizing the digital backbone of SIR. this is building
and adoption of digital infrastructure that would facilitate the integration of digital
technology in all areas of tax administration to continuously improve internal and
external services. In this pillar, we have eight projects: Internal Revenue Integrated
System; establishment of a command center; enterprise use of enterprise architecture;
cybersecurity policies and tools; cloud computing provisioning; use of modern tools,
development tools, big data tools; use of collaboration tools for digital workplace; and
application programming interfaces.
For the third pillar, enhancing policies, governance and standards, that is
reformulation and institutionalization of new SIR policies, governance and standards to
enable, support, and ensure the success of digital transformation. Three modules on
data governance and data management framework with data analytics tool; Document
Tracking and Management System; Cybersecurity Assessment Programs; Electronic
 COMMITTEE ON WAYS AND MEANS
17 August 2022/ MLMR /11- 3

Invoicing/Receipting System and Electronic Sales Reporting; Enterprise Risk

Management and Monitoring and Managing of Administrative Cases.
In the fourth pillar of elevating taxpayer experience and innovating BIR
services, we elevate taxpayer experience through convenient, fast and reliable
online/digital transactions in the areas of registration, filing, payment, audit and
enforcement. We provide excellent service to all taxpayers allowing them to
experience customer delight or high level of satisfaction. Online services on
complaints, the modules... the online services on complaints, appointments, feedback,
tax clearance queueing; electronic ONETT System; enhance IRSIS for alcohol and
sweetened beverages; online registration and update system; interactive chat box

•
capability within contact center; the taxpayer's ledger portal; the TIN verifier mobile
application; the eFiling System and BIR Assist App Program.
Indeed, the Digital Transformation Program will be the Bureau's most important
strategy in enhancing the efficiency, productivity and resourcefulness of our
organization. In a nutshell are our projects and undertakings under our DX Program
that are scheduled in this roadmap. We'll notice that we have started already 2021 ...
the elevating taxpayer experience by giving them special news biz registration. In this
2022, we have also started some of the modules I have presented. And up to 2024,
we are in the process of asking some additional budget for all of these projects.
In the next slide, I will present some initial accomplishment during this Digital
Transformation Journey and this is more on our social media presence where you will

• see that we, BIR, increase its social media presence to reach as many taxpayers we
want to serve. We monitored our presence in Facebook and YouTube, seeing to it that
continued expansion of exposure is happening. The dissemination of information,
education and communication are done through several ways - printed materials, tri-
media. But this one, we wanted to reach more, therefore, you will notice that we have
reached ... the highest is 9.6 million in Facebook. And in YouTube, the highest is... in
this semester, of 834,317 views.
In the next slide, also, is through the years, 2019-2022, we have increased the
number of e-payment transactions and the share of e-payment transactions to total
transactions has been increasing and it's now 38 percent. We wanted to see this as
much as 70 percent.
Next slide.
Even in e-filers are increasing and the percentage share of e-filers to total filers
is also increasing, 58 percent in 2019 and now in 2022, from January to June, 83
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 COMMITTEE ON WAYS ANO MEANS
17 August 20221 MLMR 111- 4

percent. And this... the next slide is on the payments or the electronically filing of
returns. So, you'll notice that the BIR do not have long queues anymore and the
percentage share of e-filed returns is now up... is now on the 95 percent for the 1st
Semester of 2022.
Additional immediate innovative solutions from the OX Program are as follows:
enhanced computerized selection of taxpayer for audit; Implement a no-contact audit
policy; online TIN issuance and validation; Online application and release of Certificate
of Registration, eCAR, refunds, permits and rulings; provision of enhanced complaints
system; other online services for ease of doing business; use of data analytics for
processing big data from social media; and identify bigtime online sellers and

•
influencers.
All our endeavors are of no small magnitude. But with the help of the public,
they will surely be successfully implemented. And I hope, therefore, that we can look
at all government agencies present here as well as the private sector present in this
call to... as the Bureau's partner in these initiatives that is to support our OX Program
in service of the tax system. In many ways, the OX Program seeks to make tax
administration even more effective and efficient in serving the needs of the taxpayer.
Its success, therefore, will redound to the benefit of the public in more ways that I can
express. The past two years have truly been a challenge for all of us. Hopefully, we
are now well in within sight of our country's economic recovery. This is an aspiration
that we all share and that has motivated us through many trials.

• Thank you very much, distinguished Members of this Committee and all those
present for listening. This is the end of my presentation.
THE ACTING COMMITTEE SECRETARY. Sir, you are muted, Sir.
THE CHAIRPERSON. For all our Members, all the presentations are being
uploaded in the chat box. Now, may I go to the Bureau of Customs. Jet.
MR. VINCENT PHILIP C. MARONILLA (Assistant Commissioner, Post
Clearance Audit Group, Bureau of Customs). Good morning, Mr. Chairman. To the
Senior Vice Chair, the other Vice Chairs and the rest of the Members of the Honorable
Committee on Ways and Means of the House of Representatives.
Allow me this morning to present to you the accomplishments of the Bureau of
Customs for the year 2016 to 2022. So, today, we will present the various
breakthrough accomplishments of the Bureau of Customs in our key mission areas of
collecting revenues, facilitating trade aligned with international best practices,
 COMMITTEE ON WAYS AND MEANS
17 August 20221 MLMR 111- 5

strengthening efforts against smuggling and other customs fraud, eradicating

corruption and enhancing personal welfare and professional list.
On revenue collection, the Bureau of Customs collected a total of 3.550 trillion
pesos worth of duties and taxes from July 2016 to July 31,2022. The Bureau, through
its post clearance audit verifications and investigation of importers, also collected a
total of 6.413 billion worth of customs duties taxes and other local charges since 2018.
Under our Fuel Marking Program, a total of 45.458 billion liters of kerosene, diesel and
gasoline were marked from September 2019 to July 2022 equivalent to 457.98 billion
in taxes collected. And additional revenue amounting to 3.489 billion was also
collected from public auctions conducted by the Bureau since 2016.

•
As for our trade facilitation efforts, the Philippines trade facilitation score has
improved in its rank and the Bureau of Customs is now ranked 3rd among the 10
Southeast Asian Nations. In the latest United Nations Global Survey on Digital and
Sustainable Trade Facilitation Report, the overall performance of the Philippines goes
from 80.65 percent in 2019 to 86.02 percent in 2021 giving us the 3rd ranking tied with
Malaysia among 10 Southeast Asian Nations.
To make the Bureau of Customs also compliant with the best practices in trade
facilitation, the Bureau enrolled in the World Customs Organization Mercator
Programme in 2019. At the onset of the program, the Bureau scored a rating of 48.96
percent implementation maturity in August 2019. As to date, the Bureau of Customs
has already achieved a rating of 89.86 percent as reported by the WCO under its

• Mercator Stocktaking Report.

The Bureau also spearheaded the technical working group that helps
implement the national single window and the ASEAN single window. As of 2016, only
nine trade regulatory government agencies or TRGAs remain actively on board the
NSW 1. The Bureau spearheaded the technical working group that implemented the
national single window and ASEAN single window. And at present, 21 TRGAs or trade
regulatory government agencies have been successfUlly on boarded to the Trade Net
Project which is the NSW 2 as of June 2022.
We also implemented 33 ICT projects and systems and develop 91.18 percent
of 155... or 155 out of 170 Customs processes have been automated. These projects,
which are also aligned with the Ease of Doing Business and the Anti-Red Tape Act
enable the Bureau to provide a more efficient and transparent delivery of government
services and transactions.
 COMMITTEE ON WAYS AND MEANS
17 August 20221 MLMR 111- 6

Since the onset of the pandemic, the Bureau released a total of 16,190
shipments of personal protective equipment and other medical supplies. Also,
(Inaudible) eight shipments of COVID-19 vaccines consisting of 245 million 362
thousand 440 doses were facilitated as of July 2022. They patiently facilitate trade by
eliminating port and (Inaudible) congestions. A total of 11 thousand 39 overstaying
containers were disposed since 2016, of which, 600... 6,648 were auctioned, 4,090
were condemned, and 301 were donated to various government agencies.
The Bureau also periodically conducts time release studies which are key
performance measures... measurement tools to assess and ensure that processing
time is reduced during the entire Customs clearance process. On average, it takes

• about two days for the Bureau to process imports and one day to process exports.
On our border control enhancements, from 2018 to July 2022, the Bureau has
issued 391 letters of authority against various warehouses with derogatory reports and
1,629 alert orders against shipments suspected to have violated Customs laws.
As a result, the Bureau strengthened profiling and non-intrusive inspection of
shipments. The Bureau of Customs ceased a total of 98.355 billion pesos worth of
smuggled goods.
The Bureau of Customs also jointly operating with the Philippine Drug
Enforcement Agency and the Philippine Drug Enforcement Group... the PNP Drug
Enforcement Group ceased a total of 17.067 billion worth of illegal drugs through its

•
intensified profiling and non-intrusive inspection of shipments suspected to contain
illegal drugs.
As part of the continuing efforts to curve the proliferation of smuggled goods,
the Bureau of Customs condemned 23.9 billion worth of forfeited smuggled goods
from July 2016 to July 2022.
The Bureau of Customs, likewise, intensifies its efforts against erring importers
and brokers. From 2016 and 2022, the Bureau of Customs recorded 486 total criminal
and arrested cases filed before the Department of Justice. Moreover, the Bureau of
Customs ordered the revocation of Customs accreditation of 2,076 importers and 609
Customs brokers as they were found to have violated the provisions of Republic Act
No. 10863 or the Customs Modernization and Tariff Act.
Consistent with the Bureau's boarder security measures, 2,075 customs
bonded warehouse and CBW members were inspected since 2016, one hundred
twenty-eight of which were closed for non-compliance. The Bureau of Customs also
conducted inspections among 2,951 consignees, 388 of which were found to be non-
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 COMMITTEE ON WAYS AND MEANS
17 August 20221 MLMR 111-7

compliance resulting in the revocation of their accreditations. We also establish the

Customs Operation Center, which serves as a fusion center to integrate and analyze
intelligence, enforcement, and operation and information gathered through various
sources.
Improvements in our enforcement assets were also given priority with the
procurement of 200 body-worn cameras, 20 units of fast patrol vessels, and additional
60 x-ray machines, 16 trace detection machines and 100 rifles.
More than the external process, we also firmly believe in maintaining a
professional workforce. In this regard, that we investigate and act against erring
personnel to ensure that the proper administrative sanction is imposed. Furthermore,

• the Bureau also implemented programs for integrity development and improvements
of its internal and administrative process. Along this line, the Bureau issued a total of
1,481 show cause orders, investigated 808 employees, and filed administrative cases
against 191 personnel. As a result, 21 employees were dismissed, 33 were
suspended, 23 were reprimanded, 226 were relieved from their post and 4,114 were
reshuffled or transferred to various offices.
The Bureau also works for the ISO Certification of its units and offices.
Currently, 13 ports, subparts and offices are now under ISO 9001:2015 certified ...
certification while the rests are in various stages of the ISO compliance process.
The Bureau of Customs also enrolled in the Integrity Development Program of

•
the Wortd Customs Organization. During the integrity diagnostic mission and survey,
the Bureau of Customs received a 70 percent favorable rating based on their
responses of... from both internal and external stakeholders.
The Bureau of Customs transformation is not just about streamlining Customs
policies but also investing in our people. In 2019, the Bureau of Customs embarked on
its journey towards the Competency-based Human Resource Management to attract
and retain a qualified and competent workforce. The Bureau of Customs also enrolled
in the four-stage performance governance system of the institute for solidarity in Asia
in 2019. Since then, the Bureau has consecutively bagged the gold governance
trailblazer awards as it passed the four stages of the PGS. With this, the Bureau of
Customs was also recognized as an Island of Good Governance.
Stakeholders' feedback mechanism was also fortifying resulting in the
immediate resolution and complaints and concerns... immediate resolutions of
complaint and concerns.
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 COMMITTEE ON WAYS AND MEANS
17 August 20221 MLMR 111- 8

Aligned with our zero-contact policy to eliminate corruption, the Bureau of

Customs established the customer care centers in all 17 collection districts. The
Customer Care Center reserves as the focal point for all customs related inquiries
both for walk-in and online, in compliance with our Ease of Doing Business Law.
The Bureau of Customs has also remained compliant with the freedom of
information requirements of the National Government since 2019.
As part of the Bureau's Integrity Development Program, the Bureau of
Customs commissioned the Philippine Statistics and Research Center to survey 1,000
direct external stakeholders. Survey results showed that 93 percent satisfaction, 94
percent trust and 100 percent awareness rating were achieved.

• For 2022, under the current administration, the Bureau of Customs drafted a
responsive priority measure to carry-out the marching orders of President Ferdinand
Romualdez Marcos, Jr., which are as follows: first, is to eradicate drug smuggling;
second, is to eradicate gun smuggling; third, eradicate agricultural smuggling;
increase our revenue generation; streamline and digitize Customs processes;
eradicate corruption; and improve our employees morale.
Mr. Chair and the Members of the Committee on Ways and Means, that would
be all for the Bureau of Customs. Thank you.
THE ACTING COMMITTEE SECRETARY. Chair Joey, Sir.
THE CHAIRPERSON. Deputy Speaker... may I recognize Deputy Speaker
Meehan-Singson. May I now recognize Marlene Calubag.
MS. MARLENE A. LUCERO-CALUBAG (Executive Director, National Tax
Research Center). Thank you, Sir.
THE CHAIRPERSON. Ma'am.
MS. LUCERO-CALUBAG. Thank you, Sir. Can I have my PowerPoint, Ms.
Ena. Thank you, Robert.
THE CHAIRPERSON. Ayaw lumabas. Thank you. Please proceed.
MS. LUCERO-CALUBAG. Thank you, Sir. Honorable Chairperson and
Members of the House Committee on Ways and Means, Secretary Benjamin Diokno
and the DOF principals, colleagues in government, various stakeholders here present
in the call, good morning.
It is my pleasure to present to the Committee the 2019 to 2022
accomplishments of the NTRC and special request on fees and charges. As you
know, the NTRC is not just the secretariat of the FIRB but also the Secretariat of the
Taskforce on Fees and Charges. With regard to the tax of four measures, I will no
.
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 COMMIITEE ON WAYS AND MEANS
17 August 20221 MLMR 111- 9

longer mention that. Secretary Diokno already presented the four measures of the
DOF and the NTRC serves the DOF and we're in support of all the comprehensive tax
reform program of the Department of Finance.
So, our accomplishments for 2019 to 2022, with regard to our mandate and
research, we have basic studies, a total of 134 studies from 2019 to 2022. As you
know, Sir, DBM and COA expect at least three studies per month from NTRC. And
from these basic studies, this is where we select our articles for our Tax Research
Journals, at least '12 articles. So, the comments on bills, as you notice it's a long list,
even during the pandemic, we were very productive because Congress is also
productive. For 2019, for example, 122 comments on House Bills, 124; Senate Bills,

• 11. For 2020, we are able to comment on 191 ... 107 tax bills and from the House Bills
at least 152, Senate Bills, 34. And for 2021, we are able to comment on 195 tax bills
and resolutions and for 2022, 19 comments, 37 tax bills. And we are also in receipt of
the priority measures of the Committee and we are trying to meet the deadline for
submission to the DOF-DRLO as input to the official position of the Department of
Finance.
So, for our technical assistance, as consultant to the technical committee on ...
Okay. So, the inputs to tax bills, which eventually passed into law, I did not mention
this because the good Chairman already mentioned all these tax bills, which
eventually passed into a law.

•
Next, ano, slide, please.
So, as our technical assistance to other inter-government bodies as consultant
to Technical Committee on Real Property Valuation and to the Executive Committee
on Real Property Valuation, as you know, our client here are the RDOs and the BIR.
So, we attend meetings, public hearings on the review of the proposed revised zonal
values in coordination with various RDOs of the BIR. We have the list of the RDOs
which the NTRC have rendered technical assistance from 2019 up to 2022. The
Secretariat did the Fiscal Incentives Review Board, as you know, under the CREATE
Act, the mandate of the FIRB Secretariat expanded under the CREATE Act. So,
instead of just evaluating or proving applications for tax subsidies and there's already
the evaluation of applications for tax incentives under the CREATE Act, which as of
August 2022, the FIRB Secretariat was able to evaluate and approve 14 projects
already under its coverage. We can request the FIRB Secretariat for details on this
project, for example, as to the location, description and the incentives granted to this
project.
 COMMITTEE ON WAYS AND MEANS
17 August 20221 MLMR III - 10

Next slide, please.

Okay. As special request by the Committee on the Task Force on Fees and
Charges, NTRC was able to monitor the number of the national government agencies
mandated by law to impose fees and charges. So, in 2021, for example, we're able to
monitor 50 and for the first of 2022,32 agencies.
Next slide, please.
So, here are the collection from fees and charges. So, we got this from the
BTr. Because of the pandemic, there was a deep in the collection 2020, but it slowly
picked up in 2021. So, we hope we can collect in 2022, we can go back to the
collection of 2018 and 2019. We hope to get at least 55 billion from this for 2022.

•
Next slide, please.
Okay. So, we had a survey of this, common to national government agencies-
certification fee, accreditation fee, filing fee, docket fee and so on to processing fee
and we have the range of fees from all these national government agencies for your,
ano... the 120,000, it was gathered that it came from the Bureau of Animal Industry,
for example, renewal of license to operate, veterinary drug and product manufacture.
The 250,000 there was from the Bureau Customs and the (Inaudible) customs bonded
warehouse supervision fee for large enterprises.
Next slide, please.
The number of agencies that revised their fees. From 2020-2022, there were
six agencies. We have the list, Your Honor, we can submit them to you. From 2019 of

• prior years, 85 agencies revised their fees.

fees
Next slide, please.
The top 10 collecting agencies for 2021. They comprise 81 percent of the total
and charges collection. So, we have number one, the National
Telecommunications Commission and the year of last revision of the fee were 7.6
billion. As to the details as to the fees of... that contributed to this, I don't know if it's
spectrum fees, we're still in ... we're still going to research on the details of the fees-
Land Registration Authority, LTO, Bureau of Immigration, DFA, the DPWH, DENR,
Energy Regulation... Regulatory Commission, LTFRB, Housing and Land Use
Regulatory Board. So, NTRC is constantly monitoring all these agencies and from
time to time we write them or call them as to... I'm sorry I have a flu. And, I think that
is the second to the last. ..
Next slide, please.
 COMMIITEE ON WAYS AND MEANS
17 August 2022 I MLMR III - 11

THE CHAIRPERSON. Ma'am, sorry, Chairman's privilege. Nasaan 'yung RUT

doon?
MS. LUCERO-CALUBAG. The... it's not there, Sir, but we have the RUT, Sir?
THE CHAIRPERSON. 2004. Road users.
MS. LUCERO-CALUBAG. Ah, road users... land transportation, it's not here.
THE CHAIRPERSON. Ang liit naman nu'n.
MS. LUCERO-CALUBAG. It's not here, Your Honor, on the top 10.
THE CHAIRPERSON. So, when was the last year of revision? It was never
revised since, ano, 'di ba, enactment?
MS. LUCERO-CALUBAG. Yes, po. Oho. So, if we are going to increase their

•
fees at least by 20 percent or... But then there are, when we had a survey of the fees,
we know that there is certification fee from masa baka po sila, ano naman, mag-
complain when there is an increase in the fees.
So, next slide, please.
Okay. So, this is already the new NTRC under the CREATE of... the pre-
CREATE, if before there is only an Executive Director and two Deputy Executive
Directors and then they have the different branches according to specialization. Like
we have the direct taxes, indirect taxes, local finance branch and the support
branches like the economics staff and there's statistics branch and we have our
admin. Now, during the CREATE last year, NTRC changed its structure.
Next slide, please, on the CREATE.

• Okay. So, aside from the Executive Director, NTRC now has five Deputy
Executive Director. And the old NTRC was grouped into the Tax Research Group
headed by Deputy Executive Director Debbie Sy. And then right now, we already have
the Legal Group, so we were able to hire more lawyers for the Legal Group. And
there's the Deputy Executive Director here, Mark Lester Aure, who heads the Legal
Group of the FIRB. And then we have the Deputy Executive Director of the Fiscal
Incentives Management Group headed by Director Ian Leuterio and Head of the
Monitoring Evaluation Group headed by Director Joseph Lacson. And then our FI. ..
our Financial and Admin Branch were collapsed into four divisions-the Finance, the
General Services Division, the Human Resource Management Division and our MIS
Division. This plantilla of the NTRC was approved last year by the DBM. And since
then, we started hiring financial analysts and lawyers, economists to serve FIRB
Secretariat as they needed to be trained but then we lucky enough to be able to hire
the best, the brightest of the group. n') 9
 COMMITTEE ON WAYS AND MEANS
17 August 2022 I MLMR III - 12

I think, that's all for my presentation, Your Honor. Thank you very much for this
privilege.
THE CHAIRPERSON. Thank you very much. Actually, because of the need for
many of our Members to consult, kasi nag-set ho tayo ng alas dos na puwede niyong
i-... not meet and greet but rather in the Minority Room where you can directly consult
or confer with the SIR Commissioner and the SOC from 2 p.m. onwards so we can ...
unless the other Members right now who wish to ask questions before we move
forward. Hearing none... so, 'yung mga ano po mamaya, 'yung PCSO, 'yung atin
pong mga revenue-generating agency-Customs, SIR and PCSO, will be at the room
of the Minority. Wala na po kaming makuha talagang room. And the responsible

• officers of these Commissions will be there to answer your questions. So, 'yung hindi,
ho, makapunta, can I direct the Secretariat to collect the questions from the Members?
Anyway, we will have another meeting next Tuesday and ... where we can ask for a
more extensive briefing. We are doing this actually, unlike last year kasi we just have
154 neophyte Congressmen. So, we wanted them to have a feel of exactly what is the
coverage of this Committee and which National Government Agency fall under the
direct oversight of this Committee. Sut actually, this is just to give you an initial feel of
the main of this Committee.
So, since there are no questions that are being propounded, may I seek the
leave of the Members here right now, since you will confront all of them anyway,

•
during the OSCC, during the Appro meeting, so may I discharge for the moment the
Honorable Secretary so he could attend to a lot of the things that he actually must do.
So, is there any objection to discharging the Honorable Secretary of the OOF?
Hearing none, so, may I just ask the SIR and Customs to remain and the NTRC, you
might be needed as we proceed to the next item in the agenda.
The next item in the agenda, just like all the others hearing and in consonance
with the instruction or the pronouncements of the leadership of the House, is really to
look at the priority measures of the SONA. So, now, let us begin our actual work. As
mentioned earlier, we will consider four out of the five priority measures today. First
off, let me call our Members and stakeholders attention to the following rule. Rule X,
Section 48. In passing some of this measure although we prefer to discuss them first
with Members because these are no ordinary measures, these are tax measure which
may hurt or which may favor certain industries but certainly, these measures have
gone through several deliberations already in this Committee. Like the PIFITA has
been deliberated in this Committee as well as in the floor, twice. Same with the other
 COMMITTEE ON WAYS AND MEANS
17 August 2022 I MLMR III - 13

measures, actually. So, we really prefer to discuss them with the Members and
particularly since we have a lot of fresh leaders in this Committee.
So, anyway, as author of the four measures listed in the agenda, may I request
Vice Chair Ted Haresco to be the presiding officer for the Ease of Paying Taxes, SVC
Suansing for the VAT on Digital Taxes, Vice Chair Sonny Lagon for PIFITA and Vice
Chair Allan Ty for Plastic Bag Tax. Thank you very mUCh.
So, we now... Ted Haresco.
At this juncture, Rep. Teodorico T. Haresco, Jr. presided over the meeting.
THE PRESIDING OFFICER. Thank you, Mister... (Inaudible)
THE ACTING COMMITTEE SECRETARY. Sorry, Vice Chair Ted, can you

•
please unmute?
THE PRESIDING OFFICER. Good morning, Mr. Chairman. Thank you. First,
let me congratulate our country's superheroes in economic and finance. Superman
Secretary Diokno and Captain Philippines, the brain thrust of the Philippines, our
Chairman, Joey Salceda. And, also, Mr. Chairman, I would like to thank all those who
greeted me on my birthday. And special thanks from Boracay and Aklan for the
CamSur Congressmen who withdrew their authorship or their proposed bill on
Boracay Island Development Authority. And my personal greetings to our
Congresswoman Yedda Romualdez, maraming salamat sa regalo. Of course, to
Chairman Joey, uuwi ko po sa Aklan 'yung regalo mo. Mr. Chairman, Thank you.
ComSec, please read the title of the measures under consideration .

• TEH ACTING COMMITTEE SECRETARY. Good morning, Vice Chair Ted.

House Bill No. 53, entitled, AN ACT INTRODUCING ADMINISTRATIVE TAX
REFORMS, AMENDING SECTIONS 21, 22, 51, 56, 58, 77, 81, 90, 103, 106, 108,
109,110,112,113,114,115,116,128,200,236,237,245, AND 248, AND ADDING
SECTIONS 291 AND 292 OF REPUBLIC ACT NO. 8424, OTHERWISE KNOWN AS
"THE NATIONAL INTERNAL REVENUE CODE OF 1997," AS AMENDED, authored
by Rep. Salceda. Also, House Bill No. 2823, entitled, AN ACT ORDAINING A BILL OF
RIGHTS FOR TAXPAYERS, authored by Representative Recto. Sir.
THE PRESIDING OFFICER. Yes. May I now call on Chair Salceda for his
sponsorship remarks on House Bill No. 53, for the Ease of Paying Taxes Act.
THE CHAIRPERSON. Thank you very much and thank you, also, to our
Deputy Speaker Recto who we are like-minded with respect to the Ease of Paying
Taxes. 'Yung simpleng bagay lang po dito, number one, 'yung pag ... ang gagamitin
po ng BIR for both products and services hindi na po OR kung hindi invoices para mas
 COMMITTEE ON WAYS AND MEANS
17 August 2022 I MLMR III - 14

mabilis po ang computerization at hindi na po maguto talong-tato na nag refund.

Pangalawa, ang mga taxpayer puwede na po kayong mag-submit ng... mag-file ng
inyong return anywhere in the country. Hindi katulad ngayon na kung saan ka dati
nagfa-file doon ka lang nag-file. So, ngayon, puwede ka na pong mag-file kahit saan
na ROO po 0 opisina. Pangalawa... Pangatlo, nire-recognize natin na may kakaiba
pong pangangailangan 'di tulad ng malalaking kompanya ang mga medium taxpayers.
So, we are authorizing 'yung atin pong Commissioner, Commissoiner Lilia, to form a
medium-taxpayers unit. 'Yun lang po 'yung tatlong mahahalagang bagay patungkol po
dito sa Ease of Paying Taxes.
So, with that, Mr. Chair, I seek the indulgence of this Committee that subject to

•
certain revisions in order to accommodate the important provisions of House Bill No.
2823 of our Honorable and my most esteemed colleague in Fiscal Policy, Deputy
Speaker Recto. So, with that, I seek the approval of the... of this... of the Ease of
Paying Taxes. Thank you very much, Mr. Chair.
THE PRESIDING OFFICER. Thank you, Mr. Chair.
May I now request another superhero on the economics and finance, the
author of the law of increasing our tax revenues, may we request Deputy Speaker
Ralph Recto, author of House Bill No. 2823, to give his sponsorship message, Deputy
Speaker Recto. ComSec, is Deputy Speaker Recto around?
THE ACTING COMMITTEE SECRETARY. He is in the Zoom room po and we
are asking him to unmute right now.

• THE PRESIDING OFFICER. Ah, okay.

ComSec Ena, did he signify that he will join us today?
THE ACTING COMMITTEE SECRETARY. He is in the room po. Maybe the
staff of Representative Recto can send us a message, Mr. Joseph Obensa. Sir,
maybe we can proceed with the resource person, Sir.
THE PRESIDING OFFICER. Yes.
THE CHAIRPERSON. Mr. Chair, Ted.
THE PRESIDING OFFICER. Yes.
THE CHAIRPERSON. My, ano... I have read the House Bill No. 2823 and it
can easily be reconciled with the Ease of Paying Taxes. So, may I just ask that this
Committee approve the EOPT in principle after we ask our resource persons,
basically, and just authorize that we consolidate some of the none... the compatible
features of House Bill 2823 for... in the preparation of the Committee Report to the
House Rules ... to the Committee on Rules.
 COMMITTEE ON WAYS AND MEANS
17 August 20221 MLMR 111- 15

Anyway, thank you very much, Mr. Chair, unless there is a violent objection to
that suggestion.
THE PRESIDING OFFICER. Any second to the Chair's motion to just
incorporate the bill of Deputy Speaker Ralph Recto?
REP. M. A. B. SUANSING. I second the motion, Chair.
THE PRESIDING OFFICER. Thank you. Thank you. Any comment from the
Department of Finance?
THE CHAIRPERSON. Tonette.
MS. ANTONETTE C. TIONKO (Undersecretary, Revenue Operations Group,
Department of Finance). Yes, good morning, everyone.

•
The DOF agrees with the noble intentions of House Bill 2823 to improve tax
compliance by simplifying procedures by segmenting taxpayers and tailoring
processes in accordance with their capacity to comply; enhancing the portability of tax
transactions; providing for the adjustment of the VAT threshold every three years; and
institutionalization of the taxpayers' Bill of Rights and the Tax Advocates Office.
We are thankful that the Committee has still carried in this bill are proposed
amendments from the last Congress specially on invoicing and VAT compliance. On
the Taxpayers Bill of Rights, we prefer a simplified Bill of Rights. This allows for
flexibility in its application. The aim of creation for taxpayers' Bill of Rights is not to
build a wall between taxpayers and tax administrators. In fact, it is instituted so that
the taxpayers will have confidence in the tax system. We also suggest a

• corresponding lift of taxpayer responsibilities and obligations be formulated as well.

This is in accordance with the suggestion of the OECT, the US Taxpayer Advocate
and the IBFD. Lastly, any penalty should be commensurate to any violation of any
right that will be imposed.
Thank you very much.
THE PRESIDING OFFICER. Thank you, Undersecretary Tonette, thank you.
BIR, any comment.
MS. GUILLERMO. Yeah, we support this bill and no further comments as it
was all commented by DOFs Undersecretary Tonette.
THE PRESIDING OFFICER. Thank you, Commissioner Lilia. Thank you.
BOC, Bureau of Customs.
THE CHAIRPERSON. Jet.
MR. MARONILLA. Yes, Your Honors. We don't have any comment for now as
looking at the proposal, Your Honors, I think, the Bureau of Customs is also towards
n~.'3
 COMMIITEE ON WAYS AND MEANS
17 August 20221 MLMR 111- 16

that particular direction. So, we will just work on the Committee, Your Honor, for
whatever technicalities that the Bureau might have comments on later, Your Honor.
But for now, Your Honor, we're supporting of the Bill, Your Honor.
THE PRESIDING OFFICER. Thank you, Attorney Vincent. Thank you. NTRC,
any comment?
MS. LUCERO-CALUBAG. Yes. Good morning, again.
NTRC endorses the House Bill 2823 as testified...

(MS. ERMY D. TIAMZON-DAOANG TOOK OVER)

•
 COMMITTEE ON WAYS AND MEANS
17 August 20221 EDTD 1111- 1

MS. LUCERO-CALUBAG. (Continuing) ... as testified by our Undersecretary

Tionko of the DOF.
Thank you, Sir.
THE PRESIDING OFFICER. Thank you, Executive Director Marie.
Tax Management Association of the Philippines.
MR. FULVia D. DAWILAN (Vice President for Internal Affairs, Tax
Management Association of the Philippines). Yes. Good morning and thank you,
Your Honors.
This is Fulvio Dawilan from the Tax Management Association of the

•
Philippines.
Just a brief one. At the outset, I would like to note that the Tax Management
Association of the Philippines fUlly supports House Bill No. 53 on the Ease of Paying
Taxes Bill. And we would like to commend the authors of the bill as this piece of
legislation is a great initiative to further enhance compliance of our tax laws and, at
the same time, provide mechanisms for the protection of the rights and welfare of
taxpayers.
We have actually provided some inputs during the deliberation of the
precursor of this bill which is House Bill No. 8942 and we are grateful that many of
our proposals were considered and are now part of this bill.
We just have few items that we would like to mention and, hopefully, the

• Committee will consider... otherwise, this may be considered in the implementing

regulations.
On the proposed amendments to Section 108 of Section 14 of the bill, making
the selling price as the basis of the VAT, we further propose that a proviso or a
sentence be added with the following tenor: "The VAT shall be due at the time of the
issuance of the invoice regardless of the time that the sale is accrued in the books."
The proposed inclusion will provide clarity as to when the VAT on the sale of service
should be due. This VAT shall be... (Uninfelligibleffechnical problem) upon issuance
of the invoice.
Second point is to have a provision for sales returns, allowances, and
discounts for sales of service, maybe a Subsection (C) of Section 108.
For the sales of goods, there is a provision which is Subsection (D) of Section
106 which provides for the reduction of the VATabie amounts due to sales returns,
allowances, and sales discounts. We propose that as counterpart provi~io:n be n~ 5
added to Section 108, perhaps a Subsection (C). This proposed inclusion will allow
 COMMITTEE ON WAYS AND MEANS
17 August 2022 I EDTD 1111 - 2

sellers of services to recover the VAT earlier paid upon sale when the same is not
collected due to allowances, refunds granted to customers.
And the last, the third point, on the proposed amendment to Section 11 0 of
the NIRC, we further propose for the removal of the word "paid" in Section 110 (A) (1)
(b) and change it to "billed by the supplier". Section 110 (A) (1) (b) requires that input
tax shall be claimed as credit only when the same has actually been paid. If this is
not changed, there would be inconsistency in the provision itself for the first
sentence, "requires the sales invoice as the evidence for the input tax", but letter (b)
requires the VAT to be... to have been actually paid which implies that the supporting

•
document shall be the official receipt and inconsistent between the seller and the
buyer where the seller requires... recognizes output tax upon the sale when the buyer
recognizes input tax only with the VAT has been actually paid.
For the Taxpayer's Bill of Rights, TMAP also fully supports this. We have
actually statements for each of the rights mentioned only why... mentioned why we
are supporting this Bill of Rights.
We have also proposals for enhancements but these are minor things. And
we can submit probably this for reference only.
And that's all. Thank you very much for this opportunity.
THE CHAIRPERSON. Okay. Thank you very much, Mr. Chair.
In response to TMAP, I accept the first two comments. And may I just ask our

• Committee Secretariat to please include that. But with respect to the third, fourth,
and fifth, I would defer and ... probably to Tonette in terms of the disposition of the
language whether it could be accommodated via IRR or an RMC and possibly in the
proposed inputs of the DOF to the final substitute report that would be submitted to
the Committee on Rules.
So, at this point, Mr. Chair, unless there are other, let me just clarify my
motion earlier. May I request that HB 53 be approved, subject to some amendments
prepared by the Secretariat as the Committee's report, and that compatible provision
of OS Recto's bill and the DOF's and the TMAP's proposal be integrated into the bill
by...for substitution by the Committee on Rules.
THE PRESIDING OFFICER. Thank you, Chair.
Thank you, Mr. Dawilan, for your specific and significant remarks.
MR. DAWILAN. Thank you, Your Honors.
THE PRESIDING OFFICER. ComSec...
THE CHAIRPERSON. May I ask for a second.
 COMMITTEE ON WAYS AND MEANS
17 August 20221 EDTD 1111- 3

THE PRESIDING OFFICER. Yes. Can anybody...

REP. M. A. B. SUANSING. Second, Mr. Chair.
THE PRESIDING OFFICER. It's seconded. The motion of Chair Salceda is
passed.
THE CHAIRPERSON. I think Congressman Colada has something to say.
THE PRESIDING OFFICER. ... (Uninfelligibleffechnical problem)
REP. LEX ANTHONY CRIS A. COLADA. I was... 1 was trying to say second
the motion, Mr. Chair.
THE CHAIRPERSON. Thank you very much.

•
THE PRESIDING OFFICER. Thank you very much.
Now that we have heard our resource persons, may we ask the Minority and
thereafter the Majority if they have any questions. Minority.
REP. ARLENE D. BROSAS. No questions, Mr. Chair.
THE CHAIRPERSON. Thank you, Arlene. I'm sure you're reserving it for
the next.
REP. BROSAS. Yes, actually. (Laughs) Actually, Chair, it's for the next two
bills yata iyan na mayroon. I have lots of questions there. So, doon ko na ire-
reserve iyon, Mr. Chair.
THE PRESIDING OFFICER. Do we have any questions from the Majority?
THE CHAIRPERSON. So, may I repeat my motion, which has been

• seconded, Mr. Chair, and for our ruling of the Chair, our Chair Ted Haresco, with
respect to House Bill No. 53.
REP. ROSANNA "RIA" V. VERGARA. Mr. Presiding Officer.
THE CHAIRPERSON. Mr. Presiding Officer, I think... I'm asking for a ruling
that it is considered approved and an instruction to the Committee Secretary,
essentially that HB 53 is approved, subject to some... certain amendments prepared
by the Secretariat as the Committee's report, and that compatible provision of DS
Recto's Bill of Rights as well as the DOF proposal be integrated into the bill for
substitution by the Committee on Rules.
Ria, you have a motion. Sorry.
REP. VERGARA. Yes, Mr. Chair. Mr. Presiding Officer, in consultation with
the Honorable Chair, I propose an amendment to the provision on the creation of a
Taxpayers Advocate Office. Pursuant to the policy pronouncements of the President
to streamline the govemment, I respectfully propose that instead of creating a"' new
office that is independent from the BIR, the Commissioner should just designate an
 COMMITTEE ON WAYS AND MEANS
17 August 20221 EDTD 1111- 4

existing office that shall have the powers and perform the duties of the Taxpayers
Advocate Office.
On the screen are the proposed amendments.
THE CHAIRPERSON. Excellent. Very good. Thank you very much, Ria.
You're so bright, brilliant. The author accepts, Your Honor.
REP. VERGARA. Mr. Chair, this is your amendment. I'm just. .. (Laughter)
THE PRESIDING OFFICER. If this is acceptable to the Chair, I see no
reason we cannot approve it. Hearing no objection, the motion is approved.
REP. M. A. B. SUANSING. Mr. Chair.

•
THE CHAIRPERSON. Yes, Mika.
REP. M. A. B. SUANSING. Mr. Presiding Officer, Honorable Members of the
Committee, may I make a motion. I move that we approve, with amendment on
Section 28, as proposed by Representative Ria Vergara, House Bill No. 53, entitled,
AN ACT INTRODUCING ADMINISTRATIVE REFORMS AMENDING SECTIONS 21,
22,51,56,58,77,81,90,91,103,106,108,109,110,112, 113, 114, 115, 116, 128,
200, 236, 237, 245, AND 248, AND ADDING SECTIONS 291 AND 292 OF
REPUBLIC ACT NO. 8424, OTHERWISE KNOWN AS "THE NATIONAL INTERNAL
REVENUE CODE OF 1997", AS AMENDED.
THE PRESIDING OFFICER. Is there any second to the motion?
THE CHAIRPERSON. Dagooc.

• REP. DAGOOC. Second the motion, Mr. Chair.

REP. COLADA. Second the motion.
THE PRESIDING OFFICER. Is there any objection? Upon motion, duly
seconded, there having no objection, the Committee hereby approves, with
amendment, House Bill No. 53.
REP. ROBES. Mr. Chair.
THE PRESIDING OFFICER. Yes.
THE CHAIRPERSON. Yes.
REP. ROBES. Yeah. May we request or make a motion that everybody
present. .. all Members present could be a co-author of the bill.
Thank you so much.
THE CHAIRPERSON. Accepted.
REP. BROSAS. Mr. Chair...
THE PRESIDING OFFICER. Yes.
 COMMITTEE ON WAYS AND MEANS
17 August 2022 I EDTD 1111 - 5

REP. BROSAS. ... baka makahabol pa ako, if ever. So, just don't put my
ano... don't put my name there. Okay. (Laughter)
THE PRESIDING OFFICER. The Taxpayer's Bill of Rights, the Taxpayers
Advocate Office in House Bill No. 53 shall be created as a new title in the National
Internal Revenue Code of 1997, as amended.
Your bill, House Bill 2823 or AN ACT ORDAINING A BILL OF RIGHTS FOR
TAXPAYERS, regarding the authorship of Deputy Speaker Recto, also has the same
subject matter. Given this, would Your Honor... since Deputy Speaker Recto is not
here, I hope he will be willing to adopt House Bill No. 53 and be the co-author of the

•
same. Since the Majority has not objected and this has been passed, may I request
the Secretariat to inform Deputy Speaker Recto that he will be a co-author of the
same.
THE CHAIRPERSON. Thank you. Thank you. Thank you, Mr. Chair
THE PRESIDING OFFICER. Thank you.
REP. M. A. B. SUANSING. Mr. Chair...
THE CHAIRPERSON. Yes, Mika.
REP. M. A. B. SUANSING.... may I make a motion?
THE CHAIRPERSON. Okay.
REP. M. A. B. SUANSING. Since the Secretariat has already prepared a
draft Substitute Bill incorporating these amendments, may I move that we approve

• the Unnumbered Substitute Bill to House Bill No. 53 and its corresponding
Committee Report and direct the Secretariat to file the same.
REP. VERGARA. I second the motion.
THE PRESIDING OFFICER. Is there any objection? Upon motion duly
seconded... ls there any objection? Upon motion duly seconded, there having no
objection, the Committee hereby approves the Unnumbered Substitute Bill to House
Bill No. 53 and its corresponding Committee Report. The Secretariat is directed to
file the same with the Committee on Rules.
THE CHAIRPERSON. Mika.
REP. M. A. B. SUANSING. Yes, Mr. Chair. I believe a while ago
Representative Robes already made a motion, the motion to make all the Members
present here today, except as manifested by Representative Brosas, to be co-
authors of the same measure.
THE CHAIRPERSON. I welcome the Members as co-authors of this'Rriority
n')9
measure, together with Deputy Speaker Recto, Mr. Presiding Officer.
 COMMITTEE ON WAYS AND MEANS
17 August 20221 EDTD 1111 - 6

Thank you very much.

THE PRESIDING OFFICER. Yes. Is there any objection? Hearing none,
the motion is hereby approved. The Secretariat is also directed to invite the other
Members to co-author the measure via Viber, if that is acceptable to the author.
THE CHAIRPERSON. Everybody is welcome, Mr. Chair.
THE PRESIDING OFFICER. Thank you.
At this juncture, may we call on Senior Vice Chair Mika Suansing to preside
over the consideration of the measures clarifying the imposition on digital transaction.
At this juncture, Rep. Micaela Angela B. Suansing presided over the meeting.

•
THE PRESIDING OFFICER. Thank you very much, Vice Chair Ted Haresco.
And thank you very much to our Honorable Chairman, Chairman Joey Salceda, for
the opportunity to preside.
ComSec, please read the title of the measures under consideration.
THE CHAIRPERSON. Harvard na Harvard talaga... (Unintelligibleffechnical
problem)
THE ACTING COMMITTEE SECRETARY. Good morning, Senior Vice
Chair.
House Bill No. 372, entitled, AN ACT IMPOSING VALUE-ADDED TAX ON
DIGITAL TRANSACTIONS IN THE PHILIPPINES, AMENDING FOR THE
PURPOSE SECTIONS 105, 108, 109, 110, 113, 114, AND 236 AND ADDING A

• NEW SECTION 105-A OF THE NATIONAL INTERNAL REVENUE CODE OF 1997,

AS AMENDED, authored by Representative Salceda.
House Bill No. 3253, entitled, AN ACT ESTABLISHING DIGITAL TAXATION
IN THE PHILIPPINES, authored by Rep. Colada.
And House Bill No. 3341, entitled, AN ACT ESTABLISHING DIGITAL
AMUSEMENT TAXATION IN THE PHILIPPINES, authored by Representative
Haresco.
THE PRESIDING OFFICER. Thank you, ComSec.
May I recognize Chair Salceda for his sponsorship remarks on House Bill No.
372 on the imposition of VAT on digital transactions.
THE CHAIRPERSON. Thank you very much to our gracious Senior Vice
Chair, now the Chair.
The COVID pandemic has hastened the adoption of digital technologies in
both the private and public sectors. The internet economy in the Philippines n4. 0
significantly increased from a pre-pandemic gross merchandise value of 379 billion in
 COMMITTEE ON WAYS AND MEANS
17 August 20221 EDTD 1111- 7

2019 to 900...almost tripling to 921.4 billion gross merchandise value in 2021 based
on Google's e-Conomy Southeast Asia 2021 Report. Moreover, the report cites the
intemet economy of the Philippines as growing the fastest among Southeast Asian
nations and is projected to grow by 24 percent annually up to 2025.
Given the significant developments in e-commerce, international tax reforms
expanded the tax base to include nonresident digital service providers.
So, klaro ko lang po. Hindi ho kasama dito... I'm not introducing any...the
only...what's only being introduced here is the ability for the BIR to tax nonresident
foreign corporations like Facebook, Google, Lazada, et cetera. Iyong taxation with

•
respect to domestic enterprises or domestic entities, I think since they are not
exempted by the existing VAT Law, it's up and ... but, however, there are enough
protection for them. If they are below 3 million, they are exempted from VAT. If
they're earning less than 250,000 under TRAIN, they do not have to file income tax.
If they're registered with BMBE, then they are also exempted from VAT. And if their
transaction is 10,000 pesos per transaction, under the de minimis law of the CMTA,
they are also exempted.
Again, let me just repeat. This tax introduces only one thing new. It is an
international...it is an international tax reform that seeks to tax nonresident digital
service provider. So, this measure seeks to level the playing field between traditional
and digital businesses by clarifying the imposition of VAT on DSP.

• The measure also aims to strengthen tax compliance to simplify invoicing and
registration requirements for VAT-registered nonresident DSPs. It follows that House
Bill 7425, previously approved on Third and Final Reading in the 18th Congress under
the authorship and sponsorship, not by me, but by one of the genius in fiscal policy,
Congresswoman Sharon Garin, and, of course, partly by this Representation.
THE PRESIDING OFFICER. Thank you, Mr. Chair.
I would like to recognize next Representative Lex Anthony Cris A. Colada,
author of House Bill No. 3253, to deliver his sponsorship speech.
REP. COLADA. Good morning, everyone.
Thank you, Madam Chair.
I would like to thank you ...thank the Committee for including House Bill No.
3253 on Digital Taxation Act. We all know that...that it's one of the priority bills
mentioned during the SONA with the President. And as such, I'm adopting my
Explanatory Note on the matter as my sponsorship speech.
Thank you, Madam Chair. ntl
-;--
.
 COMMITTEE ON WAYS AND MEANS
17 August 20221 EDTD 1111- 8

THE PRESIDING OFFICER. Thank you very much, Representative Colada.

I would like to call next Vice Chair Teodoro "Nonong" T. Haresco, Jr., author
of House Bill No. 3341, for his sponsorship message.
Vice Chair Haresco, I think you're on mute.
REP. HARESCO. Thank you very much, Ma'am Presiding Officer.
Yes, my House Bill, the Explanatory Note basically is saying that we should
tax our digital streaming. According to e-Google, it reaches to some...
(Unintelligibleffechnical problem) dollars per year. The provincial governments have
already taxed amusement in theaters, cinemas, concert halls, and other places of

•
amusement.
The collection of 10 percent amusement tax from gross sales to consumers in
the Philippines may be extended to digital streaming services and providers. Every
digital streaming service provider must register with the Bureau of Internal Revenue.
Digital Streaming Service Returns must be filed every quarter of the year for
monitoring and revenue collection.
In view of the foregoing, immediate passing of this bill is earnestly sought for.
Thank you, Ma'am Presiding Officer.
THE PRESIDING OFFICER. Thank you, Vice Chair Haresco.
Now, may we request our resource persons for comments. Let's start with
the Department of Finance.

• MS. TIONKO. Good morning. Good morning, again.

The DOF fully supports the VAT on Digital Transactions Bill which clarifies the
taxation of digital services including digital advertising, subscription-based services,
and other services using ICT-enabled infrastructure, among others.
The bill, as mentioned by the Chairman, does not impose new taxes but
merely strengthens and streamlines our authority to collect VAT and digital
transactions by providing measures on how the providers can comply with the VAT
requirements imposed by the Tax Code. Although the bill imposes VAT on digital
transactions, its main purpose is to facilitate the collection of VAT from nonresident
DSPs. Resident online sellers are not affected by the bill since they already are
covered by our current tax regime.
Again, by leveling the playing field between traditional and digital businesses
and funding COVID-19 recovery programs, we stand to collect about 9.28 billion
-, )
pesos on the first year of implementation with this measure. .. \ '--
Thank you.
 COMMITTEE ON WAYS AND MEANS
17 August 2022 / EDTD /111 - 9

THE PRESIDING OFFICER. Thank you very much, Undersecretary Tionko.

May we now request the BIR to provide their comments.
MS. GUILLERMO. Hello. The BIR is very happy with this bill. In fact, it will
help in our revenue generation as well as our Digital Transformation Journey. This is
part of our activities or modules in the digital transformation, and we are very happy
with this bill. We don't have any objections.
THE PRESIDING OFFICER. Thank you very much, Commissioner
Guillermo.
May we now call on the Bureau of Customs and solicit their comments on the
measure.

• MR. MARONILLA. Madam Chair, we don't have any objections or comments

and we fully support the proposed bill.
Thank you.
THE PRESIDING OFFICER. Thank you very much, Attorney Vincent.
NTRC, may we solicit your comments, please.
MS. LUCERO-CALUBAG. The NTRC fully supports the proposal to clarify
the imposition of a VAT on digital transactions. So, all transactions are taxable under
the provisions of the NIRC of 1997, as amended.
Thank you.
THE PRESIDING OFFICER. Thank you very much, Executive Director

• Calubag.
We'll now call on our representatives from the different groups. First, may we
acknowledge Attorney Jem Hans-Segovia from Shopee.
MS. JAIMMIE C. HANS-SEGOVIA (Public Affairs Manager, Shopee
Philippines, Incorporated). Yes, good morning. Thank you very mUCh.
So, we would like to thank this Honorable Committee for continuing to invite
Shopee to participate in the discussions.
So, please allow me to read a statement to formally introduce our company to
this Committee.
So, Shopee is an online platform that gives buyers and sellers the space to
conduct transactions online. It plays a matching role in the transactions between
sellers, many of whom are MSMEs who are given an avenue to expand their reach
across the country and buyers who are given access to a myriad of products from the
comforts of their own homes.
n~.3
 COMMITTEE ON WAYS AND MEANS
17 August 2022/ EDTD /111- 10

So, Shopee is locally incorporated and is subject to local corporate income

taxes. Shopee is also value-added tax registered and charges VAT on its revenue
stream where applicable.
So, we are happy to participate in the discussions regarding taxes on digital
transactions. In fact, Shopee supported and participated as a resource person in the
hearings and technical working group discussions on House Bill No. 372 back when
it was still in the 18th Congress.
So, we would like to submit to this Honorable Committee our position paper
where we will provide in detail our comments and proposed revisions, especially to
the two bills-House Bill 3253 and 3341 .

• So, thank you very much.

THE PRESIDING OFFICER. Thank you, Attorney Segovia.
May we call on the Representative from Digital Economy Group, Ma'am
Kristine Tamayo-Mercado.
MS. KRISTINE ANNE V. MERCADO-TAMAYO (Partner, Quisumbing Torres
Law/Representative Digital Economy Group). Good morning, Your Honors.
First, thank you very much as well for always inviting the Digital Economy
Group to participate in these meetings even back in the...during the 18th Congress.
The Digital Economy Group is...such as...by way of introduction, the Digital
Economy Group is an informal coalition of leading companies engaged in commerce

• with digital and non-digital means and we are very happy that we have been always
involved in discussions even in relation to House Bill 7425 which, I understand, was
passed with ...passed the final reading during the 18th Congress.
The Digital Economy Group is fine with the passing of taxation of digital
transactions which is also being implemented in other jurisdictions across the region.
The request of the Digital Economy Group is that the...Your Honors, consider the
best practices in other jurisdictions and we will be happy to submit our position paper,
our recommendations, our suggestions for consideration of this Committee as we
have actually, in fact, submitted previously during the 18th Congress, both with the
House of Representatives and the Senate previously.
Thank you.
THE PRESIDING OFFICER. Thank you, Ms. Mercado.
May we now call on the representative from Google, Mr. Mikhal De Dios. Oh,
apologies. Mr. Yves Gonzalez.
 COMMITTEE ON WAYS AND MEANS
17 August 2022/ EDTD /111 - 11

MR. YVES RANDOLPH P. GONZALEZ (Head, Government Affairs and

Public Policy, Google Philippines). Good morning, Your Honor. And thank you again
for inviting us to this hearing.
So, Google, we comply with applicable tax laws in every country that we
operate in around the world, including the Philippines. And we will continue to do so
as tax laws evolve. We will submit our position paper on the proposed measures and
look forward to continuing to work with this Committee on these proposals.
Thank you.
THE PRESIDING OFFICER. Thank you, Mr. Gonzalez.
May we now call on the representative from Vriens and Partners for Netflix,

• Mr. Andrei Buendia.

MR. ANDREI KRISTIAN D. BUENDIA (Senior Associate, Vriens and
Partners/Representative, Netflix Philippines). Good morning, Honorable Chair
Salceda, Presiding Representative Suansing, distinguished Members of the House
Committee on Ways and Means, guests, resources, and speakers.
On behalf of our client Netflix, I would like to thank the Committee for the
opportunity to continue participating on this measure. Netflix looks forward to
complying with all the necessary laws and tax policies once they are enacted. Our
client is grateful for the opportunity to share perspectives based on their experience
and other markets. And we're particularly delighted with the retaining of provisions

• surrounding simplified automated registration for nonresidents as we believe this will

improve ease of compliance, particularly for foreign companies like Netflix.
We look forward to further opportunities to continue working with the House
Committee and the Department of Finance and other relevant stakeholders on this
measure.
Thank you.
THE PRESIDING OFFICER. Thank you, Mr. Andrei.
ComSec, are there other resource persons of the call that we need to
acknowledge?
MR. ROBERTO S. CLAUDIO (Vice Chairman, International Relations,
Philippine Retailers Association). Madam Chair, may I be allowed to speak for and
on behalf of the Philippine Retailers Association? I'm Mr. Claudio.
THE PRESIDING OFFICER. Yes. Yes, Mr. Claudio, you're recogniz~d. nA5
MR. CLAUDIO. Thank you, Madam Chair.
 COMMITIEE ON WAYS AND MEANS
17 August 20221 EDTD 1111 - 12

First, we would just like to thank the Committee for pushing this resolution
and it has create.. .it's gonna create a level playing field which has affected the
retailers for the last two years. As you know, our market places, our online avenues
have peaked up a lot of the business to the detriment of the local retailers.
So, we feel that this resolution which will now tax the foreign DSPs that are
transacting in different market places, aggregators, forwarders, and all of these
intermediaries that this collection of value-added tax will now level the playing field.
And we'll completely support it and we are very enthusiastic in helping both the
Department of Finance, Bureau of Internal Revenue, and the Bureau of Customs to

•
ensure that the collections are properly collected and these foreign DSPs register in
the Philippines. If they cannot register or will not be able to be tracked as to whether
they're registered or not, withholding agent concept should put...be put in place to
ensure that we are able to collect the VAT accordingly.
Thank you, Madam Chairman.
THE PRESIDING OFFICER. Thank you, Mr. Bobby Claudio from the PRA.
I see that someone was raising her hand. From the US ASEAN Business
Council, Ms. Margie Lim, you're recognized.
MS. MARGARITA S. LIM (Country Representative, US ASEAN Business
Council). Good morning. Thank you for inviting us.
On behalf of the US ASEAN Business Council and our member-companies,

• who are the American investors in the country, with respect to introducing a VAT on
digital taxation, we'd like to reaffirm that alignment with key OECD principles of
neutrality, efficiency, certainty, and simplicity, effectiveness and fairness, and
flexibility, as well as international tax frameworks will ensure that the Philippines and
its domestic enterprises remain competitive globally in e-commerce.
We've provided already our comments in previous deliberations of this bill
and we'll be willing to be resource if there are other questions about how best
practices can work under this law.
Thank you.
THE PRESIDING OFFICER. Thank you, Ms. Lim.
Next, we'll call on Mr. Bensen Koh from the Asia Cloud Computing
Association.
MR. BENSEN KOH (Secretariat, Asia Cloud Computing Association). Thank
you. n~.6
 COMMITTEE ON WAYS AND MEANS
17 August 2022 / EDTD /111 - 13

Good morning, everyone and Your Honors. I'm thankful for this opportunity to
be part of this discussion. I'm speaking on behalf of the Asia Cloud Computing
Association. We are vendor-neutral association of cloud service providers seemed to
develop a safe and secure and trusted cloud environment in the Asia Pacific.
So, once again, we are very thankful for this opportunity to be a part of the
discussion. We are supportive of this ongoing work to have shaped and then bring
policy environment in all digital taxation in the Philippines. We recommend alignment
with the IMF and OEC best practices for such territorial VAT compliance and, in
particular, I would like to highlight the VAT digital tool kit for Asia Pacific as a good

•
resource reference.
So, once again, I'm very thankful for this opportunity to be a part of this
conversation.
Thank you.
THE PRESIDING OFFICER. Thank you, Mr. Koh.
Next, we'll acknowledge the representative from Lazada, Mr. Norman
Ocampo.
THE CHAIRPERSON. Mabenta talaga ang taga-Harvard.
MR. NORMAN ROLAND E. OCANA III (Senior Manager, Government Affairs,
Lazada E-Services Philippines, Incorporated). Thank you, Madam Chair.
Inasmuch as House Bill 372 primarily applies to nonresident digital service

• providers, Lazada, as a domestic corporation registered in the Philippines, is not

directly affected. Lazada primarily operates under our
(UninfelligiblelTechnical problem) model where independent merchants sell their own
products to prospective buyers. As a domestic operator of such market place, an
market...

electronic commerce platform, Lazada's revenue and VATabie transactions arise

primarily from commissions and fees that we charge sellers who use our platform
and not from the margins applicable on the sale of goods. We then report all our
transactions in our financial statements in the submissions to the BIR and pay all
taxes mandated by Philippine law.
Be that as it may, Lazada looks forward to participating in this administration's
efforts to increase tax collection and expand the tax base through relevant and
efficient tax reform measures.
We request for permission from the Honorable Chairman to allow us to submit
a position paper on the three bills, particularly on HB 3253 and HB 3341, shortlyatter
nA7
this Committee, Madam Chair.
 COMMITIEE ON WAYS AND MEANS
17 August 2022 / EDTD /11I - 14

Again, thank you very much.

THE PRESIDING OFFICER. Thank you, Mr. Norman Ocana III.
May we now acknowledge Mr. Paul Santos from the PRA.
MR. PAUL A. SANTOS (Chairman, Philippine Retailers Association). Thank
you, Madam Chair.
We, in the Philippine Retailers Association, as mentioned by our Vice Chair,
Mr. Bobby Claudio, express our support for the bills that are pending in Congress
regarding the taxation of digital services, especially of nonresident digital service
providers. I'm sorry.

•
We would like to urge the Committee to review the current application of
value-added tax on small-value imports. As mentioned by the Committee Chair
himself, existing laws will apply regarding the small-value imports or the imposition of
the de minimis value on such goods, transport and sold in the Philippines, coming
from foreign suppliers.
We urge the Committee to waive or to revoke this exemption on de
minimis...on the de minimis rule on small-value imports and impose the value-added
tax on these products. In the same way that, for example, in the EU, small-value
imports are already subject to the value-added tax within their respective
jurisdictions.
We'd also like the permission from the Committee to submit our position

• paper on this matter as soon...given the reasonable time after this meeting is over.
Thank you very much.
THE PRESIDING OFFICER. Thank you very much, Mr. Santos.
To all of the resource persons who signify their intent to submit a position
paper, may we request you to kindly submit them to the Committee Secretariat within
the week.
Okay. If there are no more resource persons who would like to speak today,
may we now call on and request the Minority and thereafter the Majority, if they have
questions. Do we have any questions from the Minority?
REP. BROSAS. Yes. Thank you, Madam Presiding Officer. Hello.
THE PRESIDING OFFICER. Go ahead. Go ahead, Rep. Arlene Brosas.
REP. BROSAS. Good morning. Good morning po. Yes. Good morning.
Good morning, Chair.
THE CHAIRPERSON. Yeah. I'm here. But the Chair now is from Harvard. n~. 8
 COMMITTEE ON WAYS AND MEANS
17 August 20221 EDTD 1111 - 15

REP. BROSAS. Yes. Allow me to...yes, 00. It's good, 'no. It's good to see
si ano...Sanay po kami na si Congresswoman Suansing, senior, ang aming kaharap,
but, nevertheless, of course, alam naman natin kung gaano kagaling ang kaniyang
anak.
Madam Chair, I would like to clarify, ano, iyong ilang mga questions ko.
Actually, last. ..noong 18th Congress, I was the one na nag-interpellate dito, pero kahit
dito sa mga ilang batas, na panukalang batas, I still have questions, 'no, na siguro
kailangang i-clarify. Tutal nandiyan naman si Chairman Joey Salceda so masasagot
natin, ano, hopefully, iyong mga tanong na ito.
Madam Presiding Officer, sinabi naman niya kanina na ang pangunahing

• target talaga ay iyong nonresident digital service providers. Tama po, ano? Pero
gusto naming malaman kung paano talaga tatamaan iyong mga ordinaryong
mamamayan sa ilalim ng panukalang digital tax na ito. Halimbawa, ano, mainam
siguro matukoy natin saan...iyong mga expected revenue streams ng digital tax na
ito. At sinabi rin kanina, ano, na iyong mga local digital service providers are already
implementing 12 percent VAT. Narinig ko po iyong Shopee at saka iyong Lazada,
ano, sinabi nila iyan. Pero sa gagawin ba nating panukalang batas, papatawan ba
ng additional VAT iyong mga digital transaction under these DSPs? Parang ganyan.
Paklaro na lang po ako. Tama ba, walang additional...
THE CHAIRPERSON. Wala.

• REP. BROSAS. Walang additional VAT, ano?

THE CHAIRPERSON. Madam Chair, wala.
REP. BROSAS. Ngayon ...
THE CHAIRPERSON. Ang mangyayari po dito, katulad nang narinig mo
kanina, there is always reference to EU, OECD. Itong mga nonresident foreign
corporation, they pay VAT in their home country even if the income is earned in the
Philippines. So, what we are trying to say here is that the income that is earned in
the Philippines should be VATed. So, hindi naman iyan as if na wala...na itong mga
Facebook, Google, they are not paying any VAT or any income tax. They do. But
they pay it to their home country. So, kaya nga there is reference to OECD, there is
reference on how the incomes will be shared. But for us to have a share, first, we
must make them covered. lyon ang ginagawa ng batas na ito. So, iyong mga hindi
naku-cover dahil, halimbawa, it's not as if...kasi akala natin, "Ah, Facebook, baka
naman i-pass on nila." Unang-una, napa-pass on na nila iyan dahil nagbabayad sila
ng buwis sa US 0 kundi sa Netherlands. Ang hinihingi lang natin na iyong incp~e, nt.. 9
16
 COMMITTEE ON WAYS AND MEANS
17 August 20221 EDTD 1111- 16

which was earned in the Philippines, should be taxed, should be properly shared with
the Philippines.
REP. BROSAS. Speaking of pass on, Chair, iyong pass on, halimbawa, ano,
kasi alam naman natin iyong VAT, eh, ano. Paano maaapektuhan, halimbawa, ang
Netflix subscriber...
THE CHAIRPERSON. Nagbabayad na ang Netflix...
REP. BROSAS....halimbawa.
THE CHAIRPERSON. ...nagbabayad na ang Netflix po ng 12 percent VAT
'pag tiningnan mo iyong...
REP. BROSAS. May 12 percent VAT iyang Netflix.

• THE CHAIRPERSON. Yes, opo.

REP. BROSAS. Hindi ba tataas siya kapag in-impose pa natin itong digi tax?
THE CHAIRPERSON. Ah, hindi na kasi nagbabayad na po kasi. Hindi
naman ho siya...resident corp... may resident corporation kasi sila, eh, tulad ng
Shop... ng Lazada. Lazada considers itself as a domestic registered corporation.
So, they're paying all the taxes that should be paid by domestic-registered
corporation. So, iyong mga nonresident foreign corporation ... pabalik-balik tayo
doon, ano? Iyang mga iyan kasi...
REP. BROSAS. 00. Pero iyan, ano ang nonresident, for example, is it the
Amazon, Netflix, Spotify, ano-ano po iyan?
THE CHAIRPERSON. Amazon.
REP. BROSAS. Amazon.
THE CHAIRPERSON. Iyong mga walang rep. office...
REP. BROSAS. Iyong Netflix, mayroon siyang local, Chair?
THE CHAIRPERSON. May local siya.
REP. BROSAS. Mayroon siyang local dito. So, may office din siya dito.
THE CHAIRPERSON. Nandito ba Netflix? Is Netflix here?
REP. BROSAS. Netflix nandito?
THE CHAIRPERSON. Kasi they're paying now. Mr. David Chen, are you
here?
MR. BUENDIA. Unfortunately, he's not here, Chair, but the local entity has
for... its support services. So, they handle the manpower aspect of this.
Unfortunately, I'm not sure if the current subscriptions are subject to VAT. But what
we know is that if VAT is imposed, and we're not currently paying VAT, that would be
passed on to the consumer.
 COMMITTEE ON WAYS AND MEANS
17 August 20221 EDTD 1III - 17

REP. BROSAS. So, iyon. That's what I am saying, 'no, Chair. Pagka,
halimbawa, estimate natin 15.49 dollars ang bayad sa standard subscription, tataas
ito ng around magkano, 'no?
THE CHAIRPERSON. One dollar.
REP. BROSAS. Mag-a-addition ba tayo dito ng 110 pesos? Malaki iyon, Mr.
Chair. Parang ...
THE CHAIRPERSON. One dollar. One dollar and fifty, seventy-five.
REP. BROSAS. Yeah, one dollar and fifty.
MS. SHARON S. GARIN (Former Representative, AAMBIS-OWA Party-List).
Chair, Chairman.

• THE CHAIRPERSON. Yes, Sharon.

MS. GARIN. Sorry, Madam Chairman. Rep. Brosas was my favorite
customer when defending this.
We have to remember the bigger picture though, Mr. Chair, because if we
have a Netflix or any kind of Netflix in the Philippines, they are paying taxes, 12
percent. So, unfair naman iyon. We are actually favoring the non-Filipinos by not
imposing this digital taxation. So, sabihin mo nang mag-i-increase siya, but it will
also cater the entry of Filipino-made Netflix, Amazon, or whatever, Mr. Chair. Level
the playing field, as you said.
THE CHAIRPERSON. Katulad ng Sky, nagbabayad ng 12. Si Netflix pala

• zero.
REP. BROSAS. So, iyon, Mr. Chair, pero magbabayad pa rin iyong ...
THE CHAIRPERSON. Opo. Kasi nagbabayad din ...
REP. BROSAS. ... magbabayad pa rin talaga siya.
THE CHAIRPERSON. ... nagbabayad din si iWant TV.
REP. BROSAS. Okay.
THE CHAIRPERSON. Nagbabayad din ng 12 percent si Vivamax. SO,lahat
ng mga domestic content. .. iyong may mga domestic content are disadvantaged.
REP. BROSAS. Mr. Chair, itong mga ito na domestic natin na local online
service providers, halimbawa, iyang GCash, magkano iyong nakukuha natin diyan-
sabi niyo iyong Sky, iyong ano-sa tax revenues?
THE CHAIRPERSON. Wala pa akong eS... do you have an estimate,
Tonette?
REP. BROSAS. Mayroon bang ano...
THE CHAIRPERSON. Tonette.
 COMMITTEE ON WAYS AND MEANS
17 August 20221 EDTD 1111- 18

MS. TIONKO. We can get that from the BIR.

THE CHAIRPERSON. Yeah. Sa Floor puwede naming ibigay sa iyo.
REP. BROSAS. Okay, 00. Pero ikaklaro ko lang, walang additional taxes
ang local digital service providers, tama?
THE CHAIRPERSON. Wala. Sa domestic wala.
REP. BROSAS. Ang mayroon ay... 00.
THE CHAIRPERSON. Domestic, nagbabayad na kasi.
REP. BROSAS. Kasi itatanong ko rin, halimbawa... O, halimbawa po, iyong
sa, ano, digital payment services tulad ng Western Union, apektado ba sila ng digital
tax na ito?

• THE CHAIRPERSON. Hindi.

REP. BROSAS. Iyong Western Union, Palawan ...
THE CHAIRPERSON. Hindi.
REP. BROSAS. ...wala silang ... walang epekto sa kanila ito. Hindi sila
madaragdagan...
THE CHAIRPERSON. Hindi.
REP. BROSAS.... because of the transaction. Kasi, 'di ba, iyan kasi iyong
kadalasan na ginagamit ng mga ordinaryong mamamayan, magpadala ng pera sa
ano.
THE CHAIRPERSON. Ibang item kasi iyon, eh.

• REP. BROSAS. Okay.

THE CHAIRPERSON.
not content delivery.
Those are financial transfer transaction. Those are

REP. BROSAS. Sa online sellers, halimbawa, binreach (breach) nila iyong 3

million na gross sales, 'di ba iyon iyong threshold, Chair?
THE CHAIRPERSON. Three million, 3 million.
REP. BROSAS. Three million, 00. Magbabayad na sila, parang ganiyan, ng
digi tax?
THE CHAIRPERSON. Pag lumampas ka ng three. Halimbawa, benta ka
nang benta ng Shein, halos lahat ngayon ng mga damit ng babae puro Shein. Wala
nang bumibili sa Zara. So, ngayon, kung kakabenta mo ng Shein, dahil bumibili ka
sa Shein, nagbenta ka online din, pag lumampas ka ng 3 million na Shein,
magbabayad ka ng VAT.
REP. BROSAS. Okay. Basta i-breach nila iyon. r~ 2
THE CHAIRPERSON. 00.
 COMMITTEE ON WAYS AND MEANS
17 August 2022 I EDTD I III - 19

REP. BROSAS. Chair, ano iyong basis noong VAT imposition sa local digital
service providers natin? Mayroon bang BIR circular.
THE CHAIRPERSON. Batas, ito. Ah, iyong domestic?
REP. BROSAS. Ito pala. So wala... Ano'ng ginagamit natin?
THE CHAIRPERSON. Hindi, hindi, hindi, hindi, hindi. Sorry. Sorry ako.
REP. BROSAS. Okay.
THE CHAIRPERSON. Ah, basta... Ngayon kasi, Ma'am, basta hindi ka
exempted, covered ka. Kung nasa... nagnenegosyo ka sa Pilipinas, hindi ka naman
3 million, hindi ka naman BMBE, hindi ka naman de minimis, ang income tax mo
naman ay less than 250, hindi ka magpa-file. Pero pag nilampasan mo iyong mga

• threshold na iyon, magbabayad ka basta you're doing business in the Philippines.

So, under the current law, if you're not exempted, you're covered.
REP. BROSAS. Okay. 00 kasi may digital footprint naman, eh, ano.
Makikita natin kung ang consumption talaga ay, 'di ba, ganoon...
THE CHAIRPERSON. Opo.
REP. BROSAS.... Mr. Chair. So, parang we go after dito sa lahat ng mga
gagamit, ano, na may digital footprint na mayroon tayong ano para makakuha tayo
ng revenues. Ganiyan ba iyon?
THE CHAIRPERSON. Ay, hindi iyon. Kanina nakita mo naman umiiyak na
iyong PRA, sila Bobby Claudio. Wala namang namimili na, eh. Puro na sa Shein.

•
Kasi nga...
REP. BROSAS. Puro na online.
THE CHAIRPERSON. ... kesyo online ka, wa tax. 'Pag bumili ka sa SM,
may tax. Pero ang sinasabi naman natin, eh, we're using the usual, the same
parameters, if your sales are less than 3 million, if you are registered with BMBE, if
your import transaction is de minimis, you don't pay VAT.
REP. BROSAS. Chair.
THE CHAIRPERSON. So, wala naman kaming binago.
REP. BROSAS. Chair. 00. Chair, ibalik ko lang, ibig sabihin, wala tayo
talagang ... wala tayong basis or wala tayong ginagamit ngayon na basis ng VAT
imposition sa local digital service providers?
THE CHAIRPERSON. Mayroon.
REP. BROSAS. 0 iyong ...
 COMMITTEE ON WAYS AND MEANS
17 August 20221 EDTD 1111- 20

THE CHAIRPERSON. 'Pag hindi ka... pag lampas kang 3 million, 'pag
lampas kang 10,000 sa import mo, 'pag lampas ka ng ... 'pag hindi ka registered sa
BMBE, iyong sales mo 0 kung ano iyong benta mo, may VAT.
REP. BROSAS. May VAT, okay. So, iyon 'yon, iyong sa VAT. Tapos, Chair,
magkano iyong expected revenues natin mula sa proposed digital tax na ito?
THE CHAIRPERSON. Nine.
REP. BROSAS. Nine...
THE CHAIRPERSON. Billion.
REP. BROSAS.... billion...
THE CHAIRPERSON. Opo.

• REP. BROSAS. ... ang madye-generate natin via digi tax?

THE CHAIRPERSON. Opo.
REP. BROSAS. Paano pe ito kinompyut (compute), Mr. Chair?
THE CHAIRPERSON. Nandito po iyong nag-compute, si Tonette Tionko.
Pero...
REP. BROSAS. Mr. Chair... (Unintelligibleffechnical problem) ano iyong
breakdown nito?
THE CHAIRPERSON. May breakdown po ako doon sa aking Explanatory
Note, iyong dati na binitiwan ko at binigay ko na lang kay Sharon. Asan na ba iyon?
Can I provide it to your office na lang? There is a detailed computation.

•
REP. BROSAS. Sige, Mr. Chair.
THE CHAIRPERSON. I will ask the DOF also to provide.
REP. BROSAS. Sige. Sige, Mr. Chair. Thank you, Mr. Chair.
Mr. Chair, ito lang iyong sa akin, ano, it is true na gusto nating i-level iyong
playing field, tapos maging fair doon, especially sa local online digital service
providers natin, kasi iyon nga iyong nata-taxan (tax), eh, 'di ba? Pero iyong iba,
iyong foreign, iyong nonresident, iyon naman iyong problema natin. Pero sa bahagi
namin kasi, for example, puwede namang iba, eh, ano, iyong pagkunan natin ng iba
pang revenues katulad ng ... kasi ibinaba nga natin iyong corporate taxes, eh, tapos,
ngayon, ito consumption-based ito na tax ang ini-impose natin. So, parang puwede
naman natin ... ni wala nga tayong wealth tax, eh, tapos corporate taxes iyong
pinababa natin noong nakaraan.
Kanina nakita ko iyong report ng BIR. Sinabi niya na sa... iyong effect noong
CREATE. So, bumaba iyong nakuha natin na revenues, tapes, ngayon,
nagkukumahog tayo ng mga ganito, Mr. Chair. Overall naman na ito, a'no, 'sa
 COMMITTEE ON WAYS AND MEANS
17 August 2022/ EDTD /111 - 21

pagtingin namin na parang kaysa mag-assert tayo ng digi tax, eh, unahin natin, ano,
na kumuha ng mga... kahit papaano, ano ho, kung corporation talaga iyong
makukuhanan natin, iyon talaga iyong male-level, ano, iyong playing field. Hindi pa
ito na maliliit iyong makukuha natin like plastic-used bags, 'di ba, iyong...
THE CHAIRPERSON. Opo.
REP. BROSAS.... itong...
THE CHAIRPERSON. Actually, your statements agree with me, eh. Eh,
baligtarin ko naman, Arlene, tutal magkaibigan tayo, ibig mong sabihin iyong kamote
ngayon, libre. Eh, iyong kamoteng imports may 40 percent tariff, gusto mo bang i-
zero iyon?

• REP. BROSAS. Hindi. Pero...

THE CHAIRPERSON. Hindi nga. Kasi ganoon kasi iyong argumento mo,
eh. IIibre natin iyong foreign, 0, di ilibre natin iyong lahat ng bigas na pumapasok
samantalang iyong rice dito sa loob, zero. Para level ang playing field, zero sa loob,
zero din sa labas. Aba'y mamamatay talaga tayo niyan.
So, we cannot. ..
REP. BROSAS. Mr. Chair...
THE CHAIRPERSON. ... in fact... In fact, Ma'am, it is so disadvantageous to
local streaming and content service provider because they are being taxed whereas
the foreigners are not because they are nonresident. So, if I want to extreme, do the

•
extreme, 0, di sige, lahat ng kamote, wala na ngayong 40 percent tariff tutal ang ating
VAT sa kamote zero.
So, ang sinasabi ko dito, in fact, it's more than just to level the playing field,
we are trying to cure a disadvantaged by local producers.
REP. BROSAS. Okay, Mr. Chair. Kung sa topic na iyan, 'no, na gusto natin
na iyong mga nonresident talaga, ano, iyong ating ano, bakit hindi tayo mag-impose
ng higher corporate taxes on nonresident DSPs?
THE CHAIRPERSON. Well, unang-una, may mga tax treaty kasi tayo.
So... Kaya nga nagkakaroon dapat ng global treaty between EU, US, sasabay tayo
dapat and it's called BEPS, base erosion and profit shifting, na sana kasama tayo
doon. At kanina lahat ho ng mga foreigners dito nag-mention na dapat sundin iyong
standard. Eh, ito pong ating ginagawa, we are trying to follow that standard. So, in
fact, iyong pag-VAT sa kanila, it's already being VATed across the world. Tayo na
lang ang hindi.
 COMMITTEE ON WAYS AND MEANS
17 August 20221 EDTD 1111- 22

So, in short, we cannot be an outlier because we have also treaty obligations

and we are a responsible member of the community of... of the community of nations.
So, kung ang VAT is... kung bina-VAT nila, actually, iilan na lang tayong hindi nagba-
VAT niyan, eh. So, bakit natin palulusutin sila samantalang mayroon namang
usapan, lalong-Ialo na... So, gusto ba nating gawing bente, treinta? Eh, iresponsable
na rin po iyon. We are a responsible member of the community of economies.
REP. BROSAS. Ako lang, Chair, ang problema ipa-pass on din nila, 'di ba?
Kaya nga natin sinasabi. ..
THE CHAIRPERSON. Huwag mo... huwag mo nga... huwag ... Hindi sa
ginagalit kita, pinas on (pass on) na nila dati kaso binayad nila sa US...

• (MS. EMERITA E. AVILA TOOK OVER)

•
 COMMITTEE ON WAYS AND MEANS
17 August 2022 I EEA IIV - 1

THE CHAIRPERSON. (Continuing)... binayad nila sa US.

MS. GARIN. Chairman.
REP. BROSAS. Pero ngayon, Chair, hindi ba tataas...
THE CHAIRPERSON. Pwede kong patuna...
REP. BROSAS. ... din ryan ngayon?
THE CHAIRPERSON. ... pwede kong patunayan na 'yung kinita ng
Facebook sa Pilipinas ni-remit nila sa Estados Unidos.
MS. GARIN. Chairman Joey.
THE CHAIRPERSON. So, ang sinasabi ko, 'yung share ng Pinas, 'yun ang
sinisingil ko. So, kung ang sinasabi mo hindi sila nagpa-pass on, naka-price in na po

• ryan, Ma'am.
REP. BROSAS. Pero, Mr. Chair, hindi ba ang effect din nitong batas kung
nag-pass on ... sinabi mo nga nag-pass on na sa ano, sa U.S. or sa ibang countries
kung nasaan 'yung ano, pera dito sa Pilipinas, magpa-pass on ka rin dito sa...
THE CHAIRPERSON. Ay opo kasi...
REP. BROSAS. (Unintelligibleffechnical problem)
THE CHAIRPERSON. ... kasi ang earnings nila...
REP. BROSAS. So, tataas din ang presyo niya.
THE CHAIRPERSON. ... ang earnings nila global. So, ang tax nila 'yung
binabayad nila sa homebase nila. Ang sinasabi ko, there is no way that the US will

• run after them because those are earnings, they will be taxed. If it is not taxed in the
Philippines, it will be taxed elsewhere and all I'm saying is that most likely they are
already paying taxes in the US for earnings eamed in the Philippines.
REP. BROSAS. Meanwhile, Mr. Chair, 'yung mga gagamit din ... 'yung mga
magagamit ay matataksan (tax) kaya actually 'yun 'yung ...
THE CHAIRPERSON. Kasi nga na-tak... wala...
REP. BROSAS. Halimbawa, Mr. Chair ...
THE CHAIRPERSON. Ipapaputol ko daliri ko...
REP. BROSAS.... 'yung online na gagamit nung software...
THE CHAIRPERSON. ... kung itaas...
REP. BROSAS. ... 'di ba?
THE CHAIRPERSON. Ipapaputol ko daliri ko kung taasan pa nila 'yung
buwis nila dito kasi nagbabayad na sila ng VAT diyan, doon sa US, hindi dito.
REP. BROSAS. So, hindi nila... Sinasabi mo ba, Mr. Chair, na hindi nila
mapa-pass on 'yan dito sa mga consumers? n~ 7
~
 COMMITTEE ON WAYS AND MEANS
17 August 2022 f EEA flV - 2

THE CHAIRPERSON. Ah, in the first place...

REP. BROSAS. Sa mga .
THE CHAIRPERSON 'yung VAT nila dito will be a tax expense mistakenly
claimed against their US taxes because we have a tax treaty.
Tonette, can you help me here?
MS. TIONKO. Uhm, yes. Uhm, if... if we're talking about... Well, this bill
basically is VAT. Right? Normally, as mentioned, you know, the real objective is
basically of the bill is just to provide a mechanism. Talaga namang may VAT already
on sale of services in the Philippines, mercn talaga, kaya lang dahil non-resident sila,

•
there is no mechanism for the Philippine government to collect. That's the reason
why we're saying that there is no new tax. It's tax that should have been paid in the
first place but there wasn't any mechanism to collect it. So, that's the reason why we
are... we are supportive of this bill, so that there will be a mechanism for the BIR to
collect the VAT that should have been paid in the first place.
REP. BROSAS. Okay. Tanong ko po. 'Yung online, halimbawa, online
advertising services, 'no, matataksan (tax) 'yan. Tama? SUbscription based
services, matataksan (tax) 'yan. Supply of electronic online services, eBooks,
ganyan, 'di ba? Lahat 'yan?
Kumbaga halimbawa, kung ako po ay isang estudyante at gagamitin ko itong
mga ito...

• THE CHAIRPERSON.
eBooks libre.
MS. TIONKO.
development tax exempt.
Exempt.
Nakalagay naman diyan, Ma'am, sa batas na ang

eBooks (Unintelligibleffechnical problem) to

REP. BROSAS. May tax exempt.

THE CHAIRPERSON. Opo.
REP. BROSAS. Yes.
MS. TIONKO. Yes, it's under CREATE exempt.
REP. BROSAS. Currently, ayan nand'yan ang lahat ng... Except dito
napansin ko lang sa educational services, Chair, nakalagay dito 'yung duly
accredited by DEPED, CHED, TESDA and those government educational institutions
lang nakalagay sa exemption. So, halimbawa, 'yung iba other than that, halimbawa,
gagamitin ko for my research and everything, lahat 'yan hindi na.
THE CHAIRPERSON. Eh, mag... nt; 8
REP. BROSAS. Kailangan ...
 COMMITTEE ON WAYS AND MEANS
17 August 2022 f EEA flV - 3

THE CHAIRPERSON. Can you ... can you suggest some other ano,
otherwise anybody pati komiks na hindi naman educational like, porn. You want porn
to be exempted.
REP. BROSAS. No.
THE CHAIRPERSON. So, you give me an ano, religious institution ...
REP. BROSAS. Hindi ang nakalagay... ang nakalagay...
THE CHAIRPERSON. Hindi nga...
REP. BROSAS.... Iang po dito duly accredited, 'no.
THE CHAIRPERSON. Importante kasi 'yan para masigurado natin na

•
educational services talaga, unless you ... you have another institution in mind now
which can be a source of accreditation.
REP. BROSAS. Parang schol... for scholarly use, ganyan, 'di ba, na mga
ano?
THE CHAIRPERSON. Okay, Ma'am. So, you want to put SUCs and CHED
ah, SUCs... you want to put SUCs as well?
REP. BROSAS. Baka pwede po iano natin, tingnan natin.
THE CHAIRPERSON. We will. .. 1will accept that ano, Ma'am.
REP. BROSAS. Yes.
THE CHAIRPERSON. I will accept that amendment. Very, very, very good
amendment.
REP. BROSAS. Anyway, Chair, 'yun ... those are my questions doon sa ano,
'no, na hindi madagdagan halimbawa, 'yung subscriptions kasi 'yung problema
naman namin dito 'yung ordinary na gumagamit ng mga ganito tapos sila 'yung... sila
'yung madadagdagan 'yung kanilang ano, kanilang bayad. But anyway, ayun po, 00.
Tapos, 'yung ilan pang mga tatanong ko sana na halimbawa, itong mga
maaapektuhan Amazon, Google. Tama po ba? Meron pa po bang iba, 'yung
covered ng batas?
THE CHAIRPERSON. Eh, 'yung iba sumusulpot na lang bigla, eh, pero ang
importante those are non-resident.
REP. BROSAS. How do we... Opo.
THE CHAIRPERSON. Non-resident.
REP. BROSAS. Paano natin 'yun ano... How will we go after them, parang
ganyan?
THE CHAIRPERSON. Eh, kasi they are non-resident. ..
REP. BROSAS. Doon sa mga susulpot.
 COMMITIEE ON WAYS AND MEANS
17 August 2022 f EEA flV - 4

THE CHAIRPERSON. ... digital service providers, based sa definition nung

ana, nung tina-tax nung tax based.
REP. BROSAS. Okay, Mr. Chair. 'Yun lang, Mr. Chair, iklaro... kinlaro ko
lang kung ana 'yung mga ana. Halimbawa, itong Maya payment, kasama 'to?
THE CHAIRPERSON. Hindi.
REP. BROSAS. Mga online newspapers po.
THE CHAIRPERSON. Hindi.
REP. BROSAS. Hindi rin. Eh, halimbawa, 'yung Canva, Mr. Chair. Sorry,
ha, indulge me in this, Mr. Chair, hindi ko alam 'yung mga ana nita, eh. Canva, 'yung

•
Zoom, Mr. Chair.
THE CHAIRPERSON. But right now, it is not exempted. But I can put this for
you, scholarly use usually through SUCs and other learning institution that consume
these services shall be exempted. We will exempt the scholar but we will not exempt
the product.
REP. BROSAS. Yes kasi, Mr. Chair, 'yung product ana naman siya, eh,
meron na siyang VAT, 'di ba?
THE CHAIRPERSON. Eh, paano kung gamitin naman ng hindi naman
deserving? Eh, kung binili ni Ayala, eh, iaano ko pa ba 'yun? Ita-tax free ko pa ba
'yun, ikaw naman. Alam mo may... may isang ana, I'm sure you will be angry with
one FIES. Ninety-seven percent of digital services are accounted for by the top one

• percent but I also don't believe that.

REP. BROSAS. rYan ang dapat nsting kunan, ana?
THE CHAIRPERSON. Precisely.
REP. BROSAS. 'Yung top one percent, Mr. Chair.
THE CHAIRPERSON. Correct.
REP. BROSAS. Pero hindi tamaan 'yung iba pa kasi, 'di ba?
THE CHAIRPERSON. Kaya nga.
REP. BROSAS. Sabi ko nga kanina...
THE CHAIRPERSON. Eh, kaya nga pero ito na nga 'yun.
REP. BROSAS.... kung consumption based, eh, pwede namang corporate.
THE CHAIRPERSON. Ninety-seven percent of digital service are consumed
by the top one percent based on the latest FIES.
REP. BROSAS. Okay, Chair. 00, 'yun (Laughs)
THE CHAIRPERSON. Hindi, eh. Alam mo hanggang ... hanggang hindi ka
nagsasawa sa akin sasagot talaga aka. n60
~
 COMMITTEE ON WAYS AND MEANS
17 August 2022 f EEA flV - 5

REP. BROSAS. (Laughs) Alam ko naman 'yun, Chair. Alam ko naman na

sasagot ka talaga sa lahat ng ano (Laughs) kahit nga sa floor, eh, sa Plenary, Mr.
Chair.
THE CHAIRPERSON. Eh, matino naman ang tanong mo, eh, dapat lang
talagang masagot.
REP. BROSAS. 'Yun. Of course, Mr. Chair, 'yun nga 'yung aming mas... we
are leaning to the corporate... more corporate taxes and not to the consumption
based na tax kasi alam ninyo naman po ngayon, hirap na hirap talaga 'yung mga tao
dahil matindi 'yung kalagayan ng ekonomiya natin. Tapos, ayaw nating pahirapan

•
'yung medyo ano na hirap na hirap na, ano, hindi na natin kailangang ...
THE CHAIRPERSON. So, Mister... Madam Chair, may I propose that Brosas
amendment that scholarly use by SUCs and other learning institution consuming
such services whether the school subscribes or the student uses through their school
account shall be exempt from this tax. No, wording na lang ng ano, ng staff. So, I'm
talking about Canva and the like because Canva is also used by big corporations
like, Ayala.
THE PRESIDING OFFICER. Yes, Mr. Chair.
THE CHAIRPERSON. So, I will exempt the PUs... the UP student but I will
not exempt. .. the big corporations.
REP. BROSAS. Scholarly services used by the SUCs and other learning

• institutions, 'no?

'yung...
THE CHAIRPERSON. Correct.
REP. BROSAS. Lastly, Mr. Chair, pa... lastly, Mr. Chair, tanong ko. Ano
Paano ninyo ire-reconcile kasi may parang mga differences 'yung tatlong
bills, ano, Mr. Chair?
THE CHAIRPERSON. Generally...
REP. BROSAS. Madam Chair.
THE CHAIRPERSON. ... 1 think what will happen, of course, there be a
substitution. Although we're right now, we're essentially talking about using Section
47 on the Garin's Bill which is 3253 which is really the third reading copy but we are
amenable to your... to include in a substitute bill to be submitted to the Committee on
Rules.
REP. BROSAS. Okay, Chair. Si Sharon gustong ... gustong mabilis 'yung
ano (Laughs). Sharon, huwag ka munang magpabilis (Laughs). n61.
MS. GARIN. Si Tonette...
 COMMITTEE ON WAYS AND MEANS
17 August 2022 f EEA flV - 6

THE CHAIRPERSON. Papahirapan mo rin naman kami sa floor, eh, ikaw

talaga.
REP. BROSAS. Okay, 'yun lang, Mr. Chair.
THE CHAIRPERSON. I'm sure you'll come up with more arguments in the
floor.
MS. GARIN. Pupuntahan kita diyan.
REP. BROSAS. 'Yun lang, Mr. Chair.
MS. GARIN. Pupuntahan kita diyan sa...
REP. BROSAS. Actually, kumukuha ako ng mga...

•
MS. GARIN. Pupuntahan kita diyan, Arlene...
THE CHAIRPERSON. Ria. Hi, Ria. Ria Vergara, can you already make a
motion for approval using section, subject to the Brosas' amendment, since it's been
amply... amply discussed already and this is the second time around?
Ria, you're on mute. We will just prepare for Brosas on the floor.
REP. VERGARA. Yes, Sir.
THE CHAIRPERSON. All the nation will listen.
REP. VERGARA. Madam Presiding Officer, Honorable Members of the
Committee, I would like to make a motion to approve with the proposed amendment
of Congo Brosas, House Bill No. 372, entitled, AN ACT IMPOSING VALUE-ADDED
TAX ON DIGITAL TRANSACTIONS IN THE PHILIPPINES, AMENDING FOR THE

• PURPOSE SECTIONS 105, 108, 109, 110, 113, 114, AND 236 AND ADDING A
NEW SECTION 105-A OF THE NATIONAL INTERNAL REVENUE CODE OF 1997,
AS AMENDED.
THE PRESIDING OFFICER. There is a motion from Representative Ria
Vergara to approve the HB 372 with the proposed amendments. Is there any
second?
THE CHAIRPERSON. Robes, pwede akong mag-second? Sonny, can you
second?
REP. ROBES. Seconded, Mr. Chair.
THE CHAIRPERSON. Thank you, Robes. You're my saviour.
THE PRESIDING OFFICER. Any...
REP. ROBES. Love you.
THE PRESIDING OFFICER. ... is there... Okay, it's been duly seconded by
Representative Rida Robes. Is there any objection? Hearing none, the motion is
approved.
 COMMITTEE ON WAYS AND MEANS
17 August 2022 f EEA flV - 7

MS. GARIN. Chairman.

THE CHAIRPERSON. Yes.
MS. GARIN. Can I just say ano lang, when we were doing this bill kasi,
Chairman Joey, actually wanted those non-residents to pay their income taxes, that's
why he didn't like this bill actually at the start...
THE CHAIRPERSON. (Laughs)
MS. GARIN. ... in fairness to Chairman Joey kasi gusto niyang i-tax talaga
kasi kumikita sila sa Pilipinas. And upon consultation with DOF, DOF was already in
the talks of like, you know, how to share the worldwide profits of Amazon and all

•
these digital companies. So, we set that aside and just stayed with VAT because
it's... they are doing business in the Philippines, they are eaming money in the
Philippines, so they have to pay something while the rest of the Filipinos do pay. So,
I think this is the best compromise to have them together with sana, Chairman Joey,
together with the Internet Transactions Act which will also regulate the digital
transactions, not only for digital products, but also for goods and services, 'no. It can
go hand in hand and protect the local players natin.
Thank you, Chairman.
THE PRESIDING OFFICER. Thank you, Representative Sharon Garin.
REP. BROSAS. Chairman, pahabollang, Chairman. Ipaalala ko lang 'yung
mga kulang na mga documents.

• THE CHAIRPERSON. Opo, it will be...

REP. BROSAS. We would like to be provided.
THE CHAIRPERSON. ... sealed, delivered on your door.
Thank you. I mean with respect to the breakdown.
REP. BROSAS. Yes.
THE CHAIRPERSON. Okay and, at the same time, of course, the final ano.
May I just ask, Tonette, are you Willing ... are you now open to income taxing them?
MS. TIONKO. Well, for the income tax, that is precisely what's covered by
the BEPS pillars one and two. So, that will end up being a sharing worldwide for
income tax but that will be harder to do. So, right now, as mentioned by Sharon, we
best focus first on the VAT because, at this point, that is what is implementable.
THE CHAIRPERSON. So, asking them to have a designated representative
will. .. is not necessarily taxing them income, 'no.
MS. TIONKO. Well, not necessarily. The wording should be just adjusted a
bit because they... I'm sure they will object to creating a permanent establishment as n~,3
~
 COMMITTEE ON WAYS AND MEANS
17 August 2022 I EEA IIV - 8

defined in the trea... technically defined in the tax treaties between the Philippines
and whatever country they are resident of.
THE CHAIRPERSON. No, but it just says, shall designate a representative
office or agent.
MS. TIONKO. Yeah. I think that's allowable if it's representative office
because in the treaties that is specifically excluded as constituting a permanent
establishment.
THE CHAIRPERSON. Okay. Ria, can you make that amendment? You're
supposed to read that.

•
REP. VERGARA. Okay. Madam Presiding Officer, in consultation with the
Chair prior to this meeting, we... he has approved that we amend the bill, so that the
non-resident digital providers will have a... designate a representative officer agent
which shall be resident corporation registered under Philippine law. I'd like to make a
manifestation that this be adopted ... included in this adopted measure.
THE PRESIDING OFFICER. If this is acceptable to the Chair, I believe that
he...
THE CHAIRPERSON. Yes.
THE PRESIDING OFFICER. ... permits...
THE CHAIRPERSON. Yes, I do.
THE PRESIDING OFFICER. ... with no (UninfelligiblelTechnical problem)...

• THE CHAIRPERSON. Kasi sino naman tatanggap nung VAT notice.

Tonette, 'di ba kailangan may tumanggap nung VAT notice?
MS. TIONKO. Yes, you're correct, Mr. Chair, and I think just to be clear, what
the purpose of having a resident agent can be expounded in a regulation. So that. ..
THE CHAIRPERSON. Bahala na kayo sa IRR.
MS. TIONKO. Yeah. Madali naman siyang i-define doon.
THE CHAIRPERSON. Thank you very much, Mister... Madam Chair.
THE PRESIDING OFFICER. Yes. If there is no objection, the motion by
Representative Vergara is approved.
REP. BROSAS. Madam Chair.
THE PRESIDING OFFICER. Yes, Representative Brosas.
REP. BROSAS. Yes. Yes, Madam Chair. Para kay Tonette, 'yung current
set up nung tax revenues natin, ano, both domestic and international, 'yun po i-
reiterate ko lang 'yung kailangan na data.
 COMMITTEE ON WAYS AND MEANS
17 August 2022 I EEA IIV - 9

(Uninfelligibleffechnical problem) ng digital service providers, ha, 00, both

local and international, ano, kasi meron tayong kinukuha international. Tama ba?
MS. TIONKO. 'Yan nga ang wala ngayon because there's no mechanism for
collecting, that's the reason why we really welcome... would welcome the passage of
this bill.
REP. BROSAS. You said before 'yung Netflix, wala sila?
MS. TIONKO. Netflix is a non ... it's a non-resident, so what we want is a
mechanism for tax authorities to be able to collect. This is... That's all. Pero kasi
kung isipin mo, they are rendering services in the Philippines. Under our current
laws, that already has VAT. What we don't have lang is the mechanism to collect it.

• That's the reason why we're saying there's really no new tax.
REP. BROSAS. Okay. Sige po, 00. So, 'yun ngang mercn lang tayo sa
current set up na ay 'yung DSPs na local.
MS. TIONKO. That's... that's right.
REP. BROSAS. So, 'yun ang pwedeng i-submit natin na...
THE CHAIRPERSON. Correct.
REP. BROSAS.... tax revenues.
MS. TIONKO. Yes.
REP. BROSAS. Okay. Thank you, Tonette. Thank you, Madam Chair.
Thank you, Chairman.

• THE PRESIDING OFFICER. Thank you, Congo Brosas.

THE CHAIRPERSON.
kamote zero tariff na, ha.
Thank you, Ariene. Otherwise... otherwise, 'yung

THE PRESIDING OFFICER. With the indulgence of Chairman Salceda, Vice

Chair Lagon.
THE CHAIRPERSON. Ah, thank you. Sonny.
REP. SONNY "SL" L. LAGON. Mr. Presiding Officer, may I make another
motion since the Secretary has already prepared the draft substitute bill, may I move
that we approve the unnumbered Substitute Bill to House Bill No. 372 and its
corresponding Committee Report and direct the Secretariat to file the same.
REP. VERGARA. I second the motion.
THE PRESIDING OFFICER. Before we proceed with the approval, I would
like to inform Vice Chairman Haresco and Representative Colada that similar
provisions in your proposed measures have been incorporated in the said substitute
bill. Is there any objection? Upon motion duly seconded, there having no objection,
 COMMITTEE ON WAYS AND MEANS
17 August 20221 EEA IIV - 10

the Committee hereby approves the unnumbered Substitute Bill to House Bill No.
372 and its corresponding Committee Report. The Secretariat is hereby directed to
file the same with the Committee on Rules.
REP. S. L. LAGON. Mr. Presiding Officer, I also move if Your Honors accept
the authors of the other measures, Vice Chair Haresco and Representative Colada,
be included as co-authors of the measures.
REP. VERGARA. I second the motion.
THE CHAIRPERSON. Accepted.
REP. S. L. LAGON. Mr. Presiding Officer, I also move that all Members

•
present including as co-authors of the measure.
THE PRESIDING OFFICER. Any second?
REP. VERGARA. Second the motion.
REP. ROBES. Seconded.
THE PRESIDING OFFICER. Is there any objection?
REP. ROBES. Madam ... Again, Madam Chair, I would like to interpolate
meron pa po kaming pag-uusapan sa... tungkol sa kamote ni Chairman kaya 'yung
name ko po ay huwag munang ilagay, so I will be able to interpolate later sa ano,
floor.
Thank you. Thank you very much. Chair Joey, thank you.
THE CHAIRPERSON. Thank you. No mention of kamote.

• REP. ROBES. Hindi na natapes 'yung kamote.

THE CHAIRPERSON. Eh, lalagyan ko talaga... aalisin ko talaga taripa niyan.
REP. ROBES. (Laughs)
THE PRESIDING OFFICER. ComSec, please note the request of
Representative Brosas to not be included as an author of the measure. If there is no
objection in the motion, the motion is hereby approved. The Secretariat is also
directed to invite other Members of the Committee to author their measure via Viber if
that is acceptable to the author, our Honorable Chairman.
THE CHAIRPERSON. I would like to thank Vice Chair Haresco,
Representative Colada for their acceptance and, of course, the very good
management. Ngayon ko lang na-realize kung gaano kagaling ng Harvard.
THE PRESIDING OFFICER. Thank you, Mr. Chair.
THE CHAIRPERSON. Nakakainggit perc si Tonette mukhang taga-Harvard
din, pati naman 'to si Sharon, eh, puro Harvard level pala itong mga kasama ko rito.
So, at this junc... Senior Vice Chair Suansing. nR6
 COMMIITEE ON WAYS AND MEANS
17 August 2022f EEA flV - 11

THE PRESIDING OFFICER. Yes, Mr. Chair. At this juncture, may I call on
Vice Chair Sonny Lagon to preside over the consideration of the measures on
PIFITA, as instructed by Chairman Salceda earlier.
At this juncture, Rep. Sonny "SL" L. Lagon presided over the meeting.
THE PRESIDING OFFICER. Thank you, Senior Vice Chair Suansing.
ComSec, please read the title of the measures under consideration.
THE CHAIRPERSON. Ano ba 'yan? Ayun.
THE ACTING COMMITTEE SECRETARY. Yes, Mr. Chair. To abbreviate
the proceedings, Your Honors, I will just read the title once because the title is...

•
THE CHAIRPERSON. Alisin mo muna 'yang ano mo.
THE ACTING COMMITTEE SECRETARY. So, we have...
THE CHAIPERSON. Wala ka namang kasamang tao d'yan.
THE ACTING COMMITTEE SECRETARY. Sir, madami po kami dito. There
are more than 10 of us here.
THE CHAIRPERSON. Okay.
THE ACTING COMMITTEE SECRETARY. We have House Bill Nos. 375,
2111 and 3244, authored by Representative Salceda, Representative Villafuerte...
LRay Villafuerte, Miguel, Horibata and Enciso, and also Representative Colada. So,
for the title, AN ACT AMENDING SECTIONS 22, 24, 25, 27, 28, 29, 32, 34, 37, 38,
39,42,51,52,54,56,57,73,108,121,122,123,174,176, 179, 181, 182, 183, 184,

• 185, 186, 187, 195, 198, AND 199; AND REPEALING SECTIONS 127, 175, 177,
178, 180, 188, 192, AND 193; ALL UNDER REPUBLIC ACT NO. 8424,
OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997,
AS AMENDED, AND FOR OTHER PURPOSES.
Madam ... Sir, thank you.
THE PRESIDING OFFICER. Thank you.
May I recognize the ever-brilliant Chair, Representative Joey Salceda, for his
sponsorship remarks on House Bill No. 375 or the Passive Income and Financial
Intermediary Taxation Act.
THE CHAIRPERSON. Actually, the... Thank you, Mr. Chair, and, of course,
my very good friend from way back... way, way back in San Pablo City.
I think this is of long overdue. Foreigners who deposit dollars pay no taxes,
but small depositors in pesos, pay 20 percent withholding tax. So, essentially,
PIFITA will essentially reduce the tax on domestic peso to 15, while imposing new
tax on foreign currency deposit units to 50. So, I'm making it neutral basically and nh1
 COMMITTEE ON WAYS AND MEANS
17 August 20221 EEA IIV - 12

therefore, I think if only for this parity or for this levelling of I ask for the consideration
of this bill, subject, of course, to certain... Because it has been overtaken by
CREATE in so many ways that there may be a need for the original format of House
Bill 375 to accommodate certain ... certain amendments in order to reconcile it with
the current law called CREATE.
Thank you very much, Mr. Chair. My good friend, Chairman Sonny Lagon.
THE PRESIDING OFFICER. Thank you, Mr. Chair, and I'm glad that you
have remembered our good old days in San Pablo.
I would like to call on Representative Luis Raymond F. Villafuerte, Jr., the

•
primary author of House Bill No. 2111 to deliver his sponsorship remarks.
Representative Villafuerte.
THE ACTING COMMITTEE SECRETARY. Yes, Sir. Ms. Bella TateI of the
Office of Congo LRay Villafuerte is, Sir, here.
THE PRESIDING OFFICER. Yes, Ma'am, please go ahead. You are
recognized.
THE CHAIRPERSON. Sino? Wala ba?
THE ACTING COMMITTEE SECRETARY. Congo Lagon, this is Ena. Si Ena
po. I was checking with Ms. Bella Tatel of the Office of Congo LRay Villafuerte's staff,
if Congo is with her. I think, he's not here po.
REP. VERGARA. Mr. Chair
THE PRESIDING OFFICER. Yes.
REP. VERGARA. On behalf of Representative Villafuerte, could we just
submit his Explanatory Note as his sponsorship remarks?
THE CHAIRPERSON. Sonny.
THE PRESIDING OFFICER. Yeah. Okay.
THE CHAIRPERSON. You accept that.
THE PRESIDING OFFICER. Yes, all noted, accepted. May I now call...
REP. VERGARA. Thank you, Sir.
THE PRESIDING OFFICER. May I now call on Representative Tsuyoshi
Anthony G. Horibata, author of House Bill No. 2111 to deliver his sponsorship
remarks.
THE ACTING COMMITTEE SECRETARY. Chair, Representative Horibata is
not in the Zoom room po.
THE PRESIDING OFFICER. Wala po ba?
THE CHAIRPERSON. Ria.
 COMMITTEE ON WAYS AND MEANS
17 August 20221 EEA IIV - 13

THE ACTING COMMITTEE SECRETARY. Wala po.

REP. VERGARA. Yes. (/naudibleffechnical problem) of Representative
Nicolas Encino (Enciso) VIII, I would like to... on his behalf to submit his Explanatory
Note as his sponsorship remark.
THE PRESIDING OFFICER. All noted and accepted.
Can we now call on Representative Lex Anthony Cris Colada, author of
House Bill No. 3244 to deliver his sponsorship remarks.
REP. COLADA. Thank you, Mr. Chair.
I'm likewise ano, adopting my Explanatory Note on the matter as my

•
sponsorship speech, Mr. Chair.
Thank you.
THE PRESIDING OFFICER. Duly noted, Representative Colada.
Now, may we ask our resource persons for their comments. Let's start from
Department of Finance.
MS. TIONKO. Thank you.
We thanked the Committee for passing the PIFITA Bill on the 17th and 18th
Congresses. We are glad that the measures been included in the priority measures
of the President and is immediately being taken up by the Committee on Ways and
Means. This highlights the importance of the PIFITA. Since the bill was passed, I
think before the pandemic and the revenue impact may have changed, and as

• mentioned by the Chair, there are other laws that were passed in between this time,
we will be submitting an enhanced DOF proposed Package 4 with the following
features: number one is reduction in the number of tax rates on passive income and
financial intermediaries from 74 to 52; adoption of originally competitive passive
income and financial intermediary tax rate; a uniform tax rate of 15 percent on
interest income on royalties, dividends, cap gains and some exemptions and
preferential tax treatment will also be removed to broaden the base. Another feature
will be the harmonization of business taxes on financial intermediaries. So, this
refers to the GRT. We have some proposals there. The next one is alignment of the
tax treatment of life and health related products. So, pre-need pension, insurance
and HMOs will be uniformly tax as proposed at 2 percent. Number six is adoption of
stock transaction tax on disposition of domestic shares listed and traded in both local
and foreign stock exchanges. Number seven is rationalization of the DST on
financial transactions. Number eight is clarification of the collective investments
scheme taxation. Number nine is adoption of tax administration provisiQns to nh 9
 COMMITTEE ON WAYS AND MEANS
17 August 20221 EEA IIV - 14

complete the tax reform proposals. We can just expound this later on. With the
amendments being introduced, the DOF-proposed Package 4 draft bill will give the
government an estimated incremental revenue of 18 billion in 2023 and 7.9 billion in
2024, before the collection will taper off in the succeeding years. However, with the
reforms introduced under Package 4 and expected developments in the financial of
capital markets, the bill can generate reliable revenue streams for the government in
the long run.
Thank you very much.
THE CHAIRPERSON. Thank you.

•
THE PRESIDING OFFICER. Thank you. Thank you for your visionary
proposal, Ma'am.
Next would be the Representative from BIR. You are now recognized.
MS. GUILLERMO. What we have, Your Honor, in the BIR now is the original
version of the House Bill. Now, with the presentation of Usec Tonette, please give us
time to comment on this bill. We want to see a copy. On the original, we express no
objection. But since I heard there will be a new draft, give us time to comment on
this.
THE PRESIDING OFFICER. Thank you, BIR.
Next would be representative from NTRC. You are now recognized.
MS. LUCERO-CALUBAG. Thank you, Sir.

• The National Tax Research Center fUlly supports the passage of Package 4
of the CTRP or PIFITA. Package 4 has long been in the legislative pipeline and it is
only right for passage in the 19th Congress to help the government achieve the much-
needed tax reform in the financial sector and capital market. So, we fUlly support the
bill, Your Honor.
Thank you.
THE PRESIDING OFFICER. Thank you, Ma'am.
Next is the Bankers Association of the Philippines, Mr. Antonio Moncupa, Jr.
You are now recognized. Please proceed. Mr. Moncupa. Do we have any
representative from Bankers Association of the Philippines?
MR. BENJAMIN P. CASTILLO (Managing Director, Bankers Association of
the Philippines). Mr. Chairman, Ben Castillo also from the BAP. Our President is
present in the Zoom meeting, however, he's unable to talk right now. We previously
submitted our position paper in the 18th Congress and given the development that's
been presented in the new House Bill, we will... we are reviewing the s.~me
nl0
 COMMITTEE ON WAYS AND MEANS
17 August 20221 EEA IIV - 15

submission and we will expect to be able to submit our position and suggestions
within a week, if you allow us, please, Mr. Chairman.
Thank you.
THE PRESIDING OFFICER. Thank you, Sir.
Can we move on to Trust Officers Association of the Philippines, Mr. Steven
Te, you have the floor.
MR. STEVEN C. TE (Vice President, Taxes and Regulated Products, Trust
Officers Association of the Philippines). Good morning, Mr. Chair and to all
Committee Members. The trust industry fully supports the passage of the proposed

•
House Bill aimed at making taxation of the financial sectors simpler, favor and more
efficient. We have disseminated the proposed measures to the member institutions
of the Trust Officers Association of the Philippines for review and we will draw up a
position paper to share our comments to the honorable Committee.
Thank you.
THE PRESIDING OFFICER. Thank you. Thank you, Mr. Te.
Next, we proceed to Philippine Insurers and Reinsurers Association
presented by Atty. Stephen Andy Olazo. You are recognized, Madam.
MS. MA. CRISTINA C. DE GUZMAN (Representative, Philippine Insurers and
Reinsurers Association). Hello. Good morning. This is Tina De Guzman
representative of the Philippine Insurers and Reinsurers Association. Please allow

• us to review the proposed bills. (/naudibleffechnical problem) the position very soon.
Thank you, Mr. Chair.
THE PRESIDING OFFICER. Thank you, Madam.
Last but not the least, we proceed to Philippine Charity Sweepstakes Office,
the Chairman, Mr. Junie Cua. You have the floor.
MR. JUNIE E. CUA (Chairman, Philippine Charity Sweepstakes Office). Mr.
Chairman, the Honorable Joey Salceda and the distinguished Vice Chairpersons of
the Committee on Ways and Means, the Philippine Charity Sweepstakes is
proposing a reduction in the documentary stamp tax which is being charged, at the
moment, from 20 percent to 5 percent. With the indulgence of the Committee, if so
desires, we can make a presentation of why we are requesting for such the reduction
in the documentary stamp tax being charged in ... against the Charity Fund of the
Philippine Charity Sweepstakes, Mr. Chairman.
THE CHAIRPERSON. Mr. Chair, Sonny, I fully support that. There has been
a very long study made by the former... one of the stalwarts of... that the government n71
~
 COMMITTEE ON WAYS AND MEANS
17 August 20221 EEA IIV - 16

will be better off really reducing the taxes because the demand for sweepstakes is
very elastic. In fact, the reduction may in fact increase the tax state because if you
look at the Laffer curve for sweepstake is much ... too much to the right already. So,
therefore, any reduction will in fact redound to higher revenues for the government.
So, I fully support and in fact the mother of our Harvard Senior Vice Chair did a very
long, long, long study and fully... that fully demonstrated that the reduction of the
documentary stamp tax on sweepstakes will redound to the fiscal benefit of, not just
the PCSO, but the ability of the State in providing individual medical assistance which
is the actual charter of the PCSO. So, the Chair can actually, I don't know whether

•
the daughter would like to make that presentation, but certainly there was a long
discussion made inside the Committee with respect to this issue and we are one with
PCSO of the need to revise, given the elasticity of the demand for sweepstakes. So,
I think kung anuman mawala po sa atin doon sa DST, dadami naman po 'yung sales
ng PCSO, dadami po 'yung Charity Fund, mas marami pong matutulungan ang
PCSO. Huwag kang masungit, Tonette Tionko.
So, Mr. Chair, I think may I just ahead accept that proposal from the PCSO.
At this point, just for purposes of...
MS. ESTRELLITA B. SUANSING (Former Representative, 1st District, Nueva
Ecija). Mr. Chair, Mr. Chair...
THE CHAIRPERSON. Yes, Ma'am Suansing, the real author.

• MS. SUANSING. This is Ging Suansing. Mr. Chair, it is already included in

the ... in your version. It's on page 26.
THE CHAIRPERSON. Oh, it's page... Thank you.
MS. SUANSING. Kasi binabantayan ko 'yan, Mr. Chair, kasi commitment
natin 'yan sa PCSO.
THE CHAIRPERSON. Okay. Thank you very much for reminding me. So,
there's nothing to accept. Sorry. Ito kasing taga-Harvard, eh, naa-amaze ako puro
mga... Tonette, Harvard ka rin ba? All of you talk like Harvardian, eh. Kaming
dalawa lang ni Arlene Brosas ang taga-Tondo, eh.
So, anyway, I fully acknowledged the new inputs from the DOF. But the best
way forward with PIFITA is really to approve it in its present form and just accept and
move towards the substitution prior to submission to the Committee on Rules where
such substitution will be made. Of course, we will be in constant consultation with
the DOF because otherwise, given the stream of new measures that are coming into
the Committee, that's why most of the Committees in Congress actually have
 COMMITTEE ON WAYS AND MEANS
17 August 20221 EEA IIV - 17

approved except for this Committee. All the other Committees just invoke Section
48 ... Rule 48, Section 10, except for the Committee on Ways and Means being
more... being the proper attitude of being cautious because of our constitutional
mandate and these are taxes and they have to power to kill or to destroy. So, I hope
that we can have immediate consultation and I would probably instruct the Senior
Vice Chair, Ria Vergara, as well as to coordinate with the DOF Undersecretary
Tonette Tionko with respect to the substitution ... the substitute bill that would be
submitted to the Committee on Rules.
Tonette, kasi kung patatagalin naman ito dito, alam ... it will not veer very far

•
away. I know there will be... you will inject new things, we will ... we will defend it in
the floor anyway.
MS. TIONKO. Yeah. That's correct. We have... I think we have a scheduled
meeting with Rep. Vergara tomorrow.
THE CHAIRPERSON. Ah, okay. So, Rep. Vergara, I think, can you follow
the script.
REP. VERGARA. Yeah. Mr. Chair...
REP. BROSAS. Mr. Chair, Mr. Chair...
THE CHAIRPERSON. Yes.
REP. BROSAS. ...before you invoke the number 48, I have some few
questions lang po.

• THE CHAIRPERSON. Okay.

REP. BROSAS. Madam Chair.
THE CHAIRPERSON. Yes, Vergara.
REP. BROSAS. Madam Chair.
REP. VERGARA. I'm not the Chair. It's...
THE CHAIRPERSON. It's Sonny.
REP. VERGARA.... Presiding Officer Lagon.
REP. BROSAS. Mr. Chairman Sonny Lagon pala.
THE PRESIDING OFFICER. Go ahead, Madam.
REP. BROSAS. Yes, thank you. Mr. Chair, I still have a few questions lang.
Konti lang po ito.
THE CHAIRPERSON. Okay lang.
REP. BROSAS. Tatanong ko lang. Ika-clarify lang po ako kaugnay sa
PIFITA. Of course, isa din naman ito sa malamang ay i-question namin sa floor pero
 COMMITIEE ON WAYS AND MEANS
17 August 20221 EEA IIV - 18

baka kailangan ko lang po maitanong 'yung ilan pa, 'no, na importante at kumuha ng
ilang mga datos, Mr. Chair.
THE CHAIRPERSON. Okay.
REP. BROSAS. Thank you, Mr. Chair.
Mr. Chair, gusto nating maunawaan 'yung implikasyon ng PIFITA, 'no, sa
mga ordinaryo din nating mamamayan kasi may adjustment dito, eh, sa buwis sa
financial intermediaries, 'no. Maaari po bang malaman kung ano 'yung kasalukuyang
taxation na nag-a-apply, 'no, sa bank services at sa non-bank financial intermediation
services tulad sa cash transfer services?

•
THE PRESIDING OFFICER. To refer the question to the Honorable Chair
Representative Joey Salceda who is the author of the bill.
THE CHAIRPERSON. No, may I'd rather, ano, straight from the horse's
mouth. Tonette, can you answer the questions kasi ang dami niyan kasi Arlene, eh.
REP. BROSAS. Madami, okay.
THE CHAIRPERSON. Arlene... Ah, Tonette...
REP. BROSAS. Example.
THE CHAIRPERSON.... can you answer that.
REP. BROSAS. Halimbawa.
MS. TIONKO. Yeah. For example... for example, sorry. For example, we
have the GRT, the gross receipts tax on banks and financial... non-banks and non-

• bank financial intermediaries, that is on the gross income. So, sini-simplify po 'yan
para mas madaling maintindihan kasi ayaw na natin ng multiple rates on... kasi
merong ... may mga complications Cyan. Like, for example, if a loan is long term, the
GRT of the bank is lower. If the loan is short term, then the higher... the GRT is
higher. So, in that sense, we... what we want basically is a simplification of the GRT
rates ... aming rate ang ano. So, with that, the bank will find it simpler to comply and
obviously ang impact sa mga borrowers ay maging simple ang kanilang mga
(/naudible/Technical problem). That's one example only.
REP. BROSAS. Okay. Kasi po under the proposed PIFITA, 'yung may mga
supposed simplification of tax rates nga po, 'no, based for financial intermediaries.
Alin po 'yung tataas, alin 'yung ibababa, parang ganu'n?
MS. TIONKO. Okay. 'Yung sa income... 'yung sa income kasi kunwari,
income... interest income on bank deposits kunwari, it's 20 percent, it's going to be
15. So, bababa siya. So, in that sense, that it affects of ordinary citizens, that's a
 COMMITIEE ON WAYS AND MEANS
17 August 20221 EEA IIV - 19

benefit to them because their interest income from their bank deposits will be lower
for that purpose.
REP. BROSAS. Eh, 'di 'yung transaction po ng ...
MS. TIONKO. So, 'yun.
REP. BROSAS. ... halimbawa, bank to bank transaction, inter banking,
parang ganyan, may epekto ba ang PIFITA doon?
MS. TIONKO. Well, inter-bank call loans exempt 'yung ano doon, eh, exempt
'yun, eh, inter-bank call loans between banks, that's exempt. So, wala. So, wala.
REP. BROSAS. Pag time deposit, pababa. Okay.

•
MS. TIONKO. Yes, yes.
REP. BROSAS. Wala. Sa time deposit, bababa.
MS. TIONKO. Bababa ang rate.
REP. BROSAS. Interbank... inter banking halimbawa na example...
MS. TIONKO. Dati ng wala. That has no... that has no withholding tax.
REP. BROSAS. Ito po 'yung sa halimbawa naman ng electronic money
issuers tulad ng Cebuana Lhuillier, GCash, GrabPay. Maaapektuhan ba sita,
Tonette?
MS. TIONKO. Hindi sila maaapektuhan because 'yung transaction diyan is
the documentary stamp tax on local remittances, wala naman 'yung doc stamps. So,
hindi sila maaapektuhan. Dati ng wala.

• THE CHAIRPERSON. May I just ano, kasi baka mas lalo tayong
mahihirapan at ano, the Chair would like to revise my position on PIFITA and just
form a TWG given the complexity of one... I actually have when I was presenting
PIFITA I have a one whole sheet of the before and after per line but however, the guy
who did it is now in NTRC. So, where is Ian? NTRC, Marlene, where is Ian?
MS. LUCERO-CALUBAG. Ian is the Deputy Director for the...
THE CHAIRPERSON. Where is he?
MS. LUCERO-CALUBAG. ... Fiscal Incentives Management.
THE CHAIRPERSON. He has the ano...
MS. LUCERO-CALUBAG. He's with us, Sir.
MS. TIONKO. Still in DOF.
THE CHAIRPERSON. So, in short, may I propose, Mr. Chair Sonny, that we
form a TWG composed of Ria Vergara, Mikaela Suansing, as well as Arlene Brosas,
so that we can go through the entire... plus, of course, the new inputs from the DOF.
Is there... And all other interested Members for as long as I think the Chair here for,
 COMMITTEE ON WAYS AND MEANS
17 August 2022 f EEA flV - 20

in the meantime, would be Ria and Vice... and the Co-Chair would be Mikaela...
Mika Suansing and but... I will put Ariene Brosas as Member and all other Members
who wish to join may join the TWG. And Ria, bahala ka na po magpatawag ng
meeting para po ma-consolidate po natin 'yung mga bagong inputs ng DOF at ma-
explain na rin po kay Ariene para ayoko naman kasing parang minamadali natin
'yung sagot ni Ariene para lang ma-approve to. Although, bukas meron na kayong
meeting, Ria, 'di ba?
REP. VERGARA. Yes, Mr. Chair but I thought the meeting tomorrow, Mr.
Chair, is for the digital... the VAT on digital taxes, not this.

•
THE CHAIRPERSON. Hindi, we have approved that already. So, I think
essentially, we are forming a new team kasi ang daming sinabi si Tonette, binigla
naman ako, hindi naman ako winarningan (warning). Ang sabi nga ni Presidente
Bongbong, bumusina ka naman, Imee.
So, I think the proper thing to do here, Sonny, sorry to cutdown your authority
at this point... at this point may I just manifest that we... So, gawa na lang tayo ng
TWG para maayos po ang lahat and I hope that you can submit the report next week.
So sorry, Sonny for cutting you down.
THE PRESIDING OFFICER. That is duly noted and acknowledged, Mr.
Chair.
THE CHAIRPERSON. Thank you very much. So...

• THE PRESIDING OFFICER. And thank you, Mr. Chair, for shedding the light
on the matter.
THE CHAIRPERSON. Thank you. So...
THE PRESIDING OFFICER. Okay. Now, that we have heard the support
and our resource persons, may I request to submit as soon as possible your position
paper for those who requested to submit. May I ask... already heard of the Minority
and thereafter, the Majority if they have questions. Do we have any questions from
the Minority? I mean, from the Majority.
Do we have any questions from the Majority? None.
REP. VERGARA. There's none, Mr. Chair. As directed by the Honorable
Chair, we will convene the TWG, Mr. Presiding Officer.
THE PRESIDING OFFICER. Okay. Thank you, Representative...
THE CHAIRPERSON. Okay. Thank you.
May I take back again the ... Thank you very much, Sonny, for very able... for
ably handling that very difficult topic called PIFITA.
 COMMITTEE ON WAYS AND MEANS
17 August 20221 EEA IIV - 21

So, at this point... at this juncture, may I call on Vice Chair Allan Ty. Is he
around to preside over the consideration of the measure imposing excise tax on
plastic bags? Allan, are you around?
Anyway, ako na lang. May I now... may I ask ComSec to please read the
titles of measure under consideration.
THE ACTING COMMITTEE SECRETARY. Yes, Chair. I think Congo Allan
Ty is here, Sir...
THE CHAIRPERSON. Is he around?
THE ACTING COMMITTEE SECRETARY.... and ready to preside. Yes, Sir.
THE CHAIRPERSON. Allan, are you around?

• THE ACTING COMMITTEE SECRETARY. Sir Allan Ty.

THE CHAIRPERSON. He's online. Allan, please take charge.
REP. ALLAN U. TY. Hello. Yes, Mr. Chairman.
THE CHAIRPERSON. Vice Chair Allan Ty is hereby recognized to preside
over the meeting.
At this juncture, Rep. Allan U. Ty presided over the meeting.
THE PRESIDING OFFICER. Mr. Chairman, good morning.
Thank you, Vice Chair Lagon.
ComSec, please read the titles of the measures under consideration.
THE ACTING COMMITTEE SECRETARY. Yes, Chair. House Bill No. 220,

• entitled, AN ACT IMPOSING EXCISE TAX ON PLASTIC BAGS, THEREBY ADDING

A NEW SECTION, DESIGNATED AS SECTION 150-C, IN THE NATIONAL
INTERNAL REVENUE CODE OF 1997, AS AMENDED, authored
Representatives Suansing and Suansing, Jr. and also House Bill No. 1811, entitled,
by

AN ACT IMPOSING EXCISE TAX ON PLASTIC BAGS, THEREBY ADDING A NEW

SECTION, DESIGNATED AS SECTION 150-C, IN THE NATIONAL INTERNAL
REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES,
authored by Representative Salceda, Chair.
Thank you, Your Honors.
THE PRESIDING OFFICER. Thank you, ComSec.
May we request. .. may we request Senior Vice Chair Mikaela Suansing and
Representative Horacio Suansing, authors of House Bill No. 220 to give their...

(MR. JEFFREY C. OVILLA TOOK OVER)

 COMMITTEE ON WAYS AND MEANS
17 August 20221 JCO 1 V - 1

THE PRESIDING OFFICER (Continuing)... to give their sponsorship

message?
REP. M. A. B. SUANSING. Thank you, Vice Chair Allan Ty.
I will deliver the sponsorship speech on behalf of Congressman Toto
Suansing, who is my co-author for the said measure.
THE PRESIDING OFFICER Go ahead.
REP. M. A. B. SUANSING. The Honorable Chairman, Joey Sarte Salceda,
my dear colleagues, resource speakers and guests, good morning.
I joined you today to sponsor House Bill No. 220, which seeks to impose an

•
excise tax on plastic bags. Despite the enactment of RA. No. 9003 or the Ecological
Solid Waste Management Act of 2001, the Philippines still generates about 2.7
million metric tons of plastic wastes and half a million metric tons of plastic wastes
•
leakage each year. Across the country, around 17 billion shopping bags are used per
year, while around 16.5 billion of smaller, thinner, and often transparent plastic bags
called "Iabo bags" are used per year. This mass consumption of plastics, most of
which are single-use, has had significant detrimental defe... ah, effects on the
environment, more notably on marine ecosystems and wildlife. Moreover, plastic
wastes have exacerbated our country's problem with flooding. All of these highlight
the need to curb the use of plastic bags.
In this line, House Bill No. 220 seeks to curve the use of plastic bags through

• the imposition of an excise tax. This measure proposes an excise tax in the amount
of 20 pesos per every kilogram removed from the place of production or released
from the custody of the Bureau of Customs. Many may ask how many pieces of
plastic bags are there in one kilogram? Plastic bags vary in weight and size, and its
weight depends on the type of material it was manufactured from, but on average, a
plastic bag weighs around 5.5 grams. This means that there are 140 to 180 pieces of
plastic bags in one kilogram. Given this, the 20-peso levy that we are proposing
translates to 11 to 14 centavos for each plastic bag. This is much lower than the levy
being imposed by other ASEAN countries such as Hong Kong, Malaysia, and
Cambodia, which ranges from 2.44 to 5 pesos per each plastic bag. The experiences
of other countries such as the United States and Canada show that imposing a tax
on plastic bags can effectively curb the usage by as much as 72 to 85 percent.
Apart from curbing usage of plastic bags, this measure aims to generate
additional revenues for the government which could be a great help in the n78
implementation of the solid waste management plans of local government units as
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 COMMITTEE ON WAYS AND MEANS
17 August 20221 JCO 1 V - 2

the measure proposes to earmark 100 percent of the revenue generated from the
plastic bags' tax for this purpose. Earlier this year, the Department of Finance
projected that the imposition of this tax will generate additional revenues of 923
million pesos in the year 2023.
Mr. Chair, my dear colleagues, this proposed bill has been significantly
discussed and extensively discussed during the previous Congress and was already
approved on Third and Final Reading. In this regard, I request the support of our dear
Members for the immediate approval of this measure.
Thank you very much, Mr. Chair.

•
THE PRESIDING OFFICER. Thank you, Senior Vice Chair Mikaela.
May I now call our Chairman, Chair Salceda, for his sponsorship speech on
House Bill No. 1811, orthe Plastic Bags Tax Act. Mr. Chair.
THE CHAIRPERSON. 0, I will. .. this is the first time I will accept. I just copy-
pasted. I just wanted my name on the bill because I truly believe in it. So, let my
Explanatory Note, which was copy-pasted from Mika Suansing, be my explana... be
my sponsorship speech.
THE PRESIDING OFFICER. Noted, Chair Salceda.
May we ask our resource persons to comments on the House measures. First
with the Department of Finance.
MS. TIONKO. The Department of Finance supports the measures proposing

• the taxation of single-use plastics. This is in line with the government's initiative to
mitigate the impact of climate change. However, we believe that the
operationalization of this measure should be carefully studied so that the interest of
the small businesses, the Paris Agreement commitments, which requires a whole-of-
government approach to address the carbon emissions in the country, and the
capacity of the BIR and the BOC to implement the same, are considered and
balanced. But, otherwise, we support this.
Thank you.
THE PRESIDING OFFICER. Thank you. Ah, BIR.
MS. GUILLERMO. Yeah. The Bureau of Internal Revenue supports this bill,
especially it addresses the challenges of the climate change. As mentioned by Usec
Tonette, there are problems, of course, on the implementation, and we will deal with
that on the IRR of this law, if passed.
So, we support. We don't have any objection. n19
THE PRESIDING OFFICER. Thank you. Ah, Bureau of Customs.
 COMMIITEE ON WAYS AND MEANS
17 August 20221 JCO 1 V - 3

MR. MARONILLA. The Bureau of Customs has no objection, Your Honor, and
is fully supportive of the bill.
Thank you.
THE PRESIDING OFFICER. NTRC.
MS. LUCERO-CALUBAG. The NTRC is supportive also of the proposal to
impose an excise tax on plastic bags for a sustainable solid waste management
program and, also, to discourage the use of plastic bags and, also, to encourage the
use of eco-friendly alternatives. So, in addition to its environmental concems, the
proposal also generates additional revenues for the government.

•
Thank you.
THE PRESIDING OFFICER. DENR. Can we hear from DENR?
MS. MA. ANTONIA Y. LOYZAGA (Secretary, Department of Environment and
Natural Resources). Yes, good morning. Am I. .. am I heard by the group?
THE PRESIDING OFFICER. Yes, you're online, Madam Secretary.
MS. LOYZAGA. Good morning, Mr. Chair, as well as Representative Ty.
The DENR, likewise, supports this bill and the set of bills. However, we note
that, in fact, there are social, as well as economic and environmental dimensions to
the use of plastic bags, and we will try to be heard as far as the implementation, as
well, the need to ensure that the processes that are involved in the adoption and the
implementation of the tax actually are clarified in order for us to be able to support

• the measures.
I will turn over now to Usec Ana Teh and Usee Mitch to give, in detail, some
of our considerations and, otherwise, we would like to say that we are in support of
the bills.
Thank you.
MS. ANALIZA A. REBUELTA-TEH (Undersecretary for Finance, Information
Systems, and Climate Change, Department of Environment and Natural Resources).
Thank you, Madam Secretary. Thank... ah, thank you, Mr. Chair. Good morning to
the honorable Members of the Committee on Ways and Means.
As mentioned by the Secretary, the DENR supports and welcomes these
proposed measures. We believe that these can reduce the unsustainable
consumption of single-use plastics and drive away the demand for the use of these
plastics, and move the people, the consumers to shift to substitution. We also
acknowledge the revenues to be generated from these acts, which can be used also nR0
in the implementation of the Solid Waste Management Act. And, particularly, we

~
 COMMITTEE ON WAYS AND MEANS
17 August 20221 JCO 1 V - 4

would like to suggest that other... that the use can also be directed to determining
actual alternatives to plastics, determining technologies that can be used for
redesigned plastic options, and this can also be a platform to determine the
mechanisms or for incentives, so that we can come up with more revenue,
recyclable, compostable, more dura... durable, or even non·plastic options. And we
will relate... in terms of operationalization, we will relate this in the implementation of
R.A. 11898 to an extended producer responsibility.
We also would like to raise that, perhaps, to enhance the proposed
measures, we can look at the studies of experience of other countries, and maybe

•
come up with some scientific research regarding the tax base to consider the quantity
or by piece in relation to the basis on weight under the proposed measures. We are
looking at these measures in the context of the ongoing formulation of a more
integrated and programmatic approach to dealing with plastic bags, which involves
manufacturing, distribution, tax of sale, and of course, segregation, and recycle.
So, we hope that these measures, legislative measures, will provide us more
opportunity to come up with more creative and transformative ways of dealing with
plastic pollution.
Thank you, Mr. Chair.
MS. LOYZAGA. Thank you, Usec Ana. Usec Mitch.
MR. JUAN MIGUEL T. CUNA (Undersecretary for Field Operations - Luzon,
Visayas, and Mindanao, Department of Environment and Natural Resources). Thank
you very much. Mr. Chair, I would like to thank the Chairman, Representative Joey
Salceda, and Congresswoman and Congressman Suansing for their respective
versions of this proposed bill.
I would just like to mention, of course, we support any measure that would
possibly reduce the circulation of solid waste, particularly plastics, which we have
seen in the recent years, particularly with all our efforts in the Manila Bay
rehabilitation. We've seen the volume of plastics ending up in our waterways, and
then, eventually, in the sea.
I just want to mention, for the information of the Committee, that there is an
ongoing study also by the Department of Science and Technology, which is studying
the life cycle assessment of plastic cutlery and the labo bags, these sando bags,
which, eventually, if found to be... if they are found to be non-environmentally...
what's this... non-environmentally viable packaging materials, there will be.a new nR1.
round of consultations that will be done for possible phase.cut, eventually.
 COMMITTEE ON WAYS AND MEANS
17 August 20221 JCO 1 V - 5

So, as Secretary Loyzaga mentioned earlier, we just want to look at also the
social implications of this. As we all know, maybe the lower classes of society will be
affected by this measure, eventually.
So, that's all, Mr. Chair. Thank you.
MS. LOYZAGA. Thank you very much.
THE PRESIDING OFFICER. Thank you, DENR. We'll take note of that
observation. Can we go to DTI?
THE CHAIRPERSON. Allan.
THE PRESIDING OFFICER. Yes...

•
THE CHAIRPERSON. Allan .
THE PRESIDING OFFICER. ... Mr. Chair.
THE CHAIRPERSON. Si Chairman ito. May I just excuse my classmate? I
think she has been asking for my excuse for the past four hours.
THE PRESIDING OFFICER. (Laughter)
So, may I excuse Ma. Antonia Loy... Yulo-Loyzaga, who trained me in
Spanish in Ateneo de Manila. Thank you, Toni. We'll see... we'll see much of you
anyway later on.
So, Allan, the... you continue to preside. Thank you.
THE PRESIDING OFFICER. Thank you, Mr. Chair. The Madam Secretary is
excused.

• Let's proceed to DTI.

MS. ANN CLAIRE C. CABOCHAN (Assistant Secretary for Consumer
Protection Group, Department of Trade and Industry). Thank you, Mr. Chairman, and
the Members of this honorable Committee, fellow government servants, and, of
course, other stakeholders.
On the part of DTI, we would like to express our general support for these
proposed measures without prejudice, of course, to the submission of a formal
position paper.
Just to highlight that on the part of the Consumer Protection Group of the DTI,
we have been advocating for sustainable consumption and production, and we
actively participate in the National Solid Waste Management Commission meetings,
whether they are the executive committee or the committee en bane. But we will
welcome any assessment on the effect of the measure on our micro, small, and
medium enterprises, as well as the plastics industry.
 COMMITTEE ON WAYS AND MEANS
17 August 20221 JCO 1 V - 6

And if you indulge me, Mr. Chair, perhaps, my colleague from the Board of
Investments would like to also add to this.
Thank you.
THE PRESIDING OFFICER. Yes, please, BOI.
MR. REYNALDO D. L1GNES (Chief Investments Specialist, Philippine Board
of Investments, Department of Trade and Industry). Good afternoon, Mr. Chair.
The BOI supports the mandate of the legislator... legislature to enact laws
that shall effect a balanced and a helpful ecology. This is under Section 16, Article II
of the 1987 Constitution.

•
The proposed provision of the draft House bill, it's an act of regulating and
production importation and so on, is a direction that supports the government efforts
in resolving the challenges in solid waste management. The House bill enjoins the
government and the private sector to become committed in ensuring the protection of
Philippine environment from the alarming predicament of solid waste brought by
improper disposal of single-use plastics and other wastes. However, in adopting the
shift to a more environment-com... environment-compliant, alternative is
recommended.
Thank you, Mr. Chair.
THE PRESIDING OFFICER. Thank you, BOI. ComSec, please note that DTI
will submit a position paper before this Committee.

• Let's proceed to Packaging Institute of the Philippines, Mr. Joseph Ross

Jocson is recognized. Is Mr. Jocson online, ComSec?
THE ACTING COMMITTEE SECRETARY. Yes, Sir. Checking, Sir.
THE PRESIDING OFFICER. Can we proceed with ...
THE ACTING COMMITTEE SECRETARY. Maybe we can call...
THE PRESIDING OFFICER. We can call Philippine...
THE ACTING COMMITTEE SECRETARY.... Sir Steven Co.
THE PRESIDING OFFICER. ... Philippine Chamber of Food Manufacturers,
Inc., Ms. Rita Imelda B. Palabyab.
THE ACTING COMMITTEE SECRETARY. Sir, Ms. Palabyab is not here, Sir.
THE PRESIDING OFFICER. Alright. So, we can proceed with Philippine
Plastics Industry Association, Incorporated, Mr. Aaron Lao.
MR. AARON TIMOTHY Q. LAO (President, Philippine Plastics Industry
Association, Incorporated). Good afternoon po, Cha... Mr. Chair.
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 COMMITTEE ON WAYS AND MEANS
17 August 20221 JCO 1 V-7

About that 20-peso per kilogram na excise tax on SUP, mayroon kasing
bagong EPR Bill that has lapsed into law last July 23, and it also put like a taxation.
So, this excise tax will become a double taxation on the plastics. Itong... it will be
approximately 25 percent na, e, based on the current market value, 'no. So, a lot of
the lower income class will be affected, especially they are the ones that's usually
use this SUPs in their daily lives. Binibigyan po sila ng mga 4Ps, tapos babawiin
naman ng excise tax ng plastic bags, so malaki rin po mawawala sa kanila.
From the presentation of Secretary Diokno a while ago, the... we have five ...
around four or five years of positive fiscal results. So, maybe this bill should ... we

•
should... this kind of income tax or a tax should be put on other types of prodUcts or
ano, 'no, on our... or other way. Like Chairman, Representative ano, Salceda, said,
e, this bill has the power to kill or destroy the industry. It will be very difficult for the
industry, and as well as the consumer, when ... because this will definitely be passed
onto the consumers, 'no.
Then, may question lang ako, e. For this excise tax, where will the funds go?
Because I would suggest if we can put it on a waste management, 'no, like a more
effective MRF, more recycling, 'no, tapos a proper... a proper disposal facility, not
just the landfill. So, I think this should be more on ... more studied based on science,
'no, more science-based study. Then, another thing is marami na pong mga LGUs
that bans the plastic. Will it reverse the ban or will... because of the excise tax, or

• paano po iyon? May phase-out na, may excise tax pa, tapos may EPR pa po? So,
tatlo na po iyong ano, e, iyong pinapataw sa plastic.
lyon lang po. Salamat.
THE PRESIDING OFFICER. Thank you, Mr. Lao.
Mr. Lao, can you ... you did mention a while ago about the law that was... that
lap... that lapsed into law, the proposed measure that lapsed into law. May I know
the part... what particular law you are referring to?
MR. LAO. It's the EPR Bill... ah, EPR Law. It's the Expanded Producers
Responsibility. It was passed during President Duterte's time, but he was not able to
sign it into law. So, it lapsed into law during President Bongbong Marcos' term, July
23, if 1... if I remember it correctly.
THE PRESIDING OFFICER. Which in that particular law, you mentioned that
there were... there is already an imposition of tax on plastic?
 COMMITTEE ON WAYS AND MEANS
17 August 20221 JCO 1V - 8

MR. LAO. Yes. It imposed ... iyong IRR will come out in around 60 days. Wala
pang definite na kung magkano, but I think it's around 5-peso per kilo. So, ipa-plus
pa itong excise tax na 20 pesos per kilo, so it will be more than 25 percent na.
THE PRESIDING OFFICER. Alright. Senior Vice Chair Mikaela...
THE ACTING COMMITTEE SECRETARY. Mr. Chair...
REP. M. A. B. SUANSING. Yes, Mr. Chair.
THE ACTING COMMITTEE SECRETARY. Mr. Chair...
THE PRESIDING OFFICER. ... do you have any comment on the...
THE ACTING COMMITTEE SECRETARY.... we are just...

•
THE PRESIDING OFFICER. ... position made by Mr. Lao?
REP. M. A. B. SUANSING. Yes, Mr. Chair.
THE PRESIDING OFFICER. Yes.
REP. M. A. B. SUANSING. I was looking through the EPR, as mentioned by
Mr...
MS. SUANSING. Lao.
REP. M. A. B. SUANSING.... Lao.
THE PRESIDING OFFICER. Lao.
REP. M. A. B. SUANSING. The provision that I am looking at is it just requires
storage companies to recover the plastic packaging waste that they produce. So far,
as to the 20 to 25 percent tax or levy being mentioned, I am not seeing that in the bill.

• MR. LAO. Your Honorable Representative Suansing, iyong ... the IRR is yet to
come out, and it will have the monetary amount for the recovery of the... of the
waste. So, if you ... if you put that amount plus the excise tax, it will be more than 20
pesos.
REP. M. A. B. SUANSING. Mr. Chair, because the ... the measure that we are
imposing is a measure that really imposes excise tax on the plastic itself. So, that's a
different cost as to the recovery, because I believe under the yeah, under the law,
the environmental... ah, wait, let me just check the ... we are we are checking the
bill. This is the first time we've heard of it, as well, Mr. Chair. So, please give us
some... a few minutes to peruse the EPR.
THE PRESIDING OFFICER. Alright. Can we ask DOF, Department of
Finance, to comment on the issue raised by Mr. Lao about double taxation?
MS. SUANSING. It's not double taxa...
nP5
THE PRESIDING OFFICER. DOF, can you kindly comment?
 COMMITTEE ON WAYS AND MEANS
17 August 20221 JCO 1 V - 9

MS. TIONKO. Yes. Well, it appears that it's a lot of tax. So, there's no double
taxation in that sense.
REP. M. A. B. SUANSING. Mr. Chair, I would ... I would just like to concur
with the honorable Undersecretary. So, what is pacified in the EPR are targets for
recovery of the plastics. So, that's percentages of the usage from the preceding year.
So, there is no levy or tax mentioned in the bill or the law, rather.
THE PRESIDING OFFICER. Thank you, SVC Mikaela.
Mr. Lao, are you satisfied with the answer by the DOF?
MR. LAO. The EPR is technically not a tax, but it is a recovery bill that reco...

•
it's like a carbon credit. So, it has... the manufacturer has to shell-out the amount to
recover the waste. So, it's... it put pressures on the financial side. So, it's not
technically a tax, but if you add on the excise tax that will be passed on to consumer,
and the EPR that will also be passed onto consumer, it will be more than 20-per kilo
of additional amount.
THE PRESIDING OFFICER. So, Mr. Lao, you are saying that it's an
additional cost on your end, the passing of EPR Law?
MR. LAO. Yes po.
THE PRESIDING OFFICER. It's more of a cost. Not on the tax issue, but
base... basically, on costs...
MR. LAO. Yeah.

• THE PRESIDING OFFICER. ... on the... producing plastic?

MR. LAO. Yes, it's the tax, excise tax, will be passed onto consumer, as well
as the EPR, the recovery will also be passed onto consumer because it's a pOlluters-
pay bill... ah, pOlluters-pay EPR Law. So, what I am saying is 'pag idadagdag po
natin iyong 20-peso per kilo, plus iyong presyo po nung EPR na recovery, passed
onto consumer, mabigat po iyon sa consumer.
THE PRESIDING OFFICER. Alright.
REP. M. A. B. SUANSING. Mr. Chair.
THE PRESIDING OFFICER. Yes.
REP. M. A. B. SUANSING. As the way I understand the EPR, the cost being
imposed or the targets being imposed is meant to be shouldered by the producers of
the plastics. It's not an end-user tax. So, as far as double taxation is concerned, there
is no risk of that if we approve the excise tax on plastics that we are proposing.
THE PRESIDING OFFICER. Thank you, SVC.
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 COMMITTEE ON WAYS AND MEANS
17 August 20221 JCO 1 V - 10

Mr. Lao, do you want to care to comment or do you agree with the position
made by our Senior Vice Chair?
MR. LAO. It's actually... it will definitely be passed on po ito... passed on po
to consumer. So, iyon kasi talaga iyong mangyayari. So, kahit na wala po sa batas
iyon, it will definitely be passed on to consumer.
THE PRESIDING OFFICER. So, Mr. Lao, can you just submit a position
paper before the Committee for consideration of our sponsor?
MR. LAO. Yes, we will submit a formal position paper by next week.
THE PRESIDING OFFICER. Alright. So, ComSec, can you please note that

•
the Philippine Plastic Industry Association will submit a position paper on the
proposed measure?
MR. LAO. Thank you po, Mr. Chair.
THE PRESIDING OFFICER. So, do you have other questions, Mr... or
comments, Mr. Lao? Nawala na si Mr. Lao.
So, let's proceed to Mother Earth Foundation, Ms...
MR. LAO. Wala na po. Salamat.
THE PRESIDING OFFICER. Ah, okay. Wala na po? Okay.
Mother Earth Foundation, Ms. Sonia Mendoza.
THE ACTING COMMITTEE SECRETARY. Sir, Ms. Sonia Mendoza is not
here. Also, the representative of Pollution Control Association is not here. But we can

• call Steven Cua na po...

THE PRESIDING OFFICER. Alright. Let's have...
THE ACTING COMMITTEE SECRETARY.... of the Philippine Amalgamated
Supermarkets Association.
THE PRESIDING OFFICER. So, Mr. Cua is recognized.
MR. STEVEN T. CUA (President, Philippine Amalgamated Supermarkets
Association, Incorporated). Yes, good afternoon, Mr. Chair, and the distinguished
participants, 'no, of this meeting.
Just to comment on the... what Mr. Lao is saying, I think what he meant was
that hindi naman double taxation, pero it's going to be, you know, double burden for
the end-user because the producer, extended producer's responsibility, will entail
costs and, for sure, it will be passed on to the consumer together with the proposed
tax plan of the ... of this bill we are talking about, we are discussing.
This bill that we are discussing right now is a... on the end of supe"11ar... in ng 1
the end of su ... from the end of supermarkets, it will definitely improve tax collection
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 COMMITTEE ON WAYS AND MEANS
17 August 20221 JCO 1 V - 11

and augment revenues for the government. However, we don't see it as socially
contributing to the public being involved in being more environmentally-friendly and
conscious, 'no, kasi hindi naman nila alam na napatawan na ng taxes iyong ... from
the manufacturers' end, 'no, dahil pinasa lang sa kanila, 'di ba? So, they will only feel
the bur... the brunt of increasing prices, 'no, but they will not feel the ... they will not
feel... they will not sense that they are doing something about the environment.
Walang personal attachment, 'no, to that. They... kasi when they... if they find out,
then they'll say, "Bakit naman ... kami na lang para... you know, kami na lang
magbayad, end-user, 'di ba, para magdala kami ng mga... matuto kaming magdala

•
ng bags."
I'll just give a very short background about supermarkets and eco-bags, 'no.
During the last few years, we've done so many attempts... the last two decades,
we've done so many attempts to try to encourage, 'no, influence the buying public to
understand that it's a battle between 'disposable' versus 'reusable' bags, okay, and
the answer is reusable, of course, for... to be more sustainable. Some people bring
back used plastic bags and say that, "Can you reuse my plastic bag?" Rendering a
disposable bag becoming, you know, reusable. See? So, for me, what's important is
to hubugin iyong attitude ng mamimili, 'no, so that they feel they are part of the, you
know, they participated and they see that they are partly responsible for a better
environment rather than, you know, not knowing that they are paying for it anyway,

• 'no, and that the money may not necessarily go to solid waste management, okay,
because hindi naman nila mame-monitor iyon, 'di ba? So, iyon lang. Our opinion lang
is it will augment income for, you know, the much needed taxes, we understand, but
it will not help shape the environmental awareness and the consciousness and the...
where... in a... ability to be... to be part of the solution, 'no, the consumers, that is.
Thank you.
THE PRESIDING OFFICER. SVC Mikaela, you want to comment?
MR. S. T. CUA. Sir, if I may add?
THE PRESIDING OFFICER. Yes, please.
MR. S. T. CUA. In the past, we've had a position paper, which we submitted
to both Congress, Senate, and in Quezon City Hall, in particular, and Quezon City
Hall adopted it, saying that if you don't bring a used plastic bag to a supermarket or
department store or a retail outlet, you will be charged one peso or two pesos for the
new plastic bag that you, you know, that you require to carry your goods. But when nR8
you bring a used plastic bag to surrender to the retailer and not use it as a, you know,
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 COMMITTEE ON WAYS AND MEANS
17 August 20221 JCO 1 V - 12

garbage bag, 'no, which is what's happening, 'no, kaya nasisira, 'no, hindi na ma-
recycle, then the supermarket or the retailer can return it to a recycler, hoping that
they will be able to augment another industry, the recycling industry, 'no. So, that I
think is more sustainable. But, of course, iyong pag-implement, pag-e-execute is, you
know, another issue po.
THE PRESIDING OFFICER. Mr. Cua, that is a local ordinance that you are
referring to, locally...
MR. S. T. CUA. That is correct.
THE PRESIDING OFFICER. ... local.. .

• MR. S. T. CUA. That is correct, Mr. Chair. That is correct. But binawi na po
nila. Binawi na nga. Ban na po sa Quezon City. Pinaano nila iyong plastic bags
(Laughter). So...
THE PRESIDING OFFICER. Ah, binawi na.
MR. S. T. CUA.... sa totoo lang, we... supermarkets are having a hard time,
and that's not the owners, it's the baggers and the cashiers arguing with customers
because if you are the customer, Sir, and you are not given, you know, anything to
put it on or paper bag, which is nasisira dahil basa, ice cream ang binili mo, you
know, wala pa rin kaming solution. In fact, globally, wala pa ring solution doon, 'no.
So, the solution I think is in the end-user... with the end-user, the consumer.

•
Magbago ang kanilang pananaw para maging environmentally-conscious, 'no, and
not hurt the oceans and not hurt the... pollute our garbage landfills po.
THE PRESIDING OFFICER. Alright. SVC Mikaela Suansing.
REP. M. A. B. SUANSING. Yes. Mr. Chair, I would just like to respond to what
Mr. Cua mentioned about public sentiment or the low likelihood that the public would
change their behavior if we impose such a tax or a levy.
So, in 2019, the Global Alliance for Incinerator Alternatives commissioned an
SWS nationwide survey, gathering Filipinos' opinions on plastics. So, a large... a
large percentage of those surveyed believed that single-use plastics are in need of
regulation or reduction. More particularly, 71 percent of them believe that sando bags
or the labo bags, which we are looking at imposing excise taxes on, need to be
regulated. Sorry, sando bags... ah, sorry. Let me... let me repeat that. So, 71 percent
of the respondents believe that sando bags needed to be... needed to be regulated,
and then 54 percent believe that labo bags need to be regulated. So, there is that
sentiment among the public that it needs to be regulated. And as I mentioned.a while .. ,9
ago, experiences of other countries that have imposed such a measure, such as US nR
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 COMMITIEE ON WAYS AND MEANS
17 August 20221 JCO 1V - 13

and Canada, have also shown that 74 to 82 percent... ah, a 72 to 82 percent curbing
of usage of plastic bags. So, there's already been historical case study data that has
shown that it is successful in curbing conception.
THE PRESIDING OFFICER. Yes, Mr. Cua.
MR. S. T. CUA. Representative Suansing, we are for regulation, 'no. We are
not... we are not saying that it shouldn't be regulated. We are for regulation po. We
understand the problem with pollution worldwide, globally, 'no. What we are saying,
iyong binanggit ko kanina na if you surrender a used plastic bag so that it doesn't
become a garbage bag, that is a way of regulating because you will be, you know,

• you'll penalize. You are not paying for the plastic bag. Dala niyo iyong plastic bag .
You are paying for... it's a penalty for not doing your job as a responsible citizen of
this planet. That is... para mahubog po iyong habit and iyong attitude towards just
disposing, you know, even paper bags on top of plastic bags po.
THE PRESIDING OFFICER. Alright.
MR. CLAUDIO. Mr. Chair, this is Mr. Claudio sa PRA.
Just some clarification and some of our position. Would I be allowed to ano,
unless you have other speakers online?
THE PRESIDING OFFICER. Actually, you are next.
MR. CLAUDIO. Okay. Just some clarification on the part of the Philippine

•
Retailers Association. Maraming retailers kasi na nagtatanong. There are many local
ordinances already banning the plastic and, in fact, most big retailers have already
taken the bigger cost burden of shifting to paper bags, which is more expensive than
the 20-peso per kilo plastic bags. I just received several inquiries from most of our
members. If this is going to be a national law, will it supersede all existing ... will it...
all existing municipal ordinances? In other words, puwede ba nila... mag-opt na lang
magbayad ng 20-peso per kilo rather than follow the local ordinance? So, can we...
can we get a clarification on that whether this will supersede any local... LGU or
municipal ordinances or it will be in tandem with whatever other ordinances are in
place right now as far as plastic bags are concerned?
THE PRESIDING OFFICER. DOF, can you kindly comment? Kind ... on the
issue raised by our... by Mr. Claudio, DOF? How about NTRC, National Tax
Research Center? Ah,DOF.
MS. TIONKO. Yes. It is a separate measure...
THE PRESIDING OFFICER. Alright. n90
 COMMITTEE ON WAYS AND MEANS
17 August 20221 JCO 1 V - 14

MS. TIONKO. ... in regard to question on whether if it will repeal a local

regu ... local impositions.
MR. CLAUDIO. Okay. So, I guess what's important is re... you clarified this in
the final... it should... this be passed, and in the final version, that this is on top of
any existing other regula... regulations as far as plastic bags are concerned.
The second question we would like to ask, Mr. Chairman, is how about
biodegradable plastic? Is this applicable for biodegradable? There is already a
biodegradable plastic, 20, 30 percent biodegradable yata. Maybe the plastics
industry can help chime-in on this on whether this includes... this is included in the

• 20 percent per kilo tax.

THE PRESIDING OFFICER. SVC... Vice Chair Mikaela.
REP. M. A. B. SUANSING. Mr. Chair, in the current version of our bill, we
have defined "plastic bags" as secondary level plastics made of synthetic or semi-
synthetic organic polymer, commonly known as "Iabo" or "sando" bags, with or
without handle, used as packaging for goods or prodUcts. So, in the current version
of the bill, we have not considered that... what Mr. Claudio said about 20 to 30
percent compostable, biodegradable products. So, we could ... we would also like to
solicit the wisdom of our resource persons for that particular query.
THE PRESIDING OFFICER. So, SV...

•
MR. CLAUDIO. Thank you. Thank you, Mr. Chairman. Those are the only two
questions so that we can help clarify this to the retailers and make sure that the
proposed bill is clear as far as they are concerned. And we do support the regulation
or the reduction of use of plastics, and the retailers... retail industry will be... will be
helpful in this because we reviewed (Laughter), we are the biggest consumer of
plastic when it comes to satisfying our consumers. The big ones have already shifted
to paper bags. So, big retailers are already taking the option of stopping the plastic
and shift to paper bags. We are concerned, however, doon sa mga maliliit. These are
the palengke, tiangge, mga small Filipino retailers that may need to survive or need
to survive with low cost containers to satisfy their customers. So, maybe in the final
version that it considers also the needs of the small retailers, especially the MSMEs
or the... iyong micro talaga, iyong mga nasa palengke, tiangge, mga... other small
stores, mga sari-sari stores.
REP. M. A. B. SUANSING. Mr. Chair.
THE PRESIDING OFFICER. Yes.
 COMMITTEE ON WAYS AND MEANS
17 August 20221 JCO 1 V - 15

REP. M. A. B. SUANSING. I would just like to respond to Mr. Claudio's

comment on the potential impact on the smaller businesses, the micro businesses.
So, if you compute it in terms of a per bag computation, the levy... the 20-peso levy
per kilogram would only translate to 11 to 14 centavos per bag. So, if we look at it,
that if that would be passed onto the consumer, that would be the additional cost that
would be added to the total value.
Thank you. Thank you, Mr. Chair.
MR. CLAUDIO. You're right, Madam Chair. In fact, we are... in our research,
it even says baka nga nasa mga 5 to 10 cents... centavos nga lang ang added cost.

•
Okay, we understand, and I think it's... it can be explained to our small retailers in
this matter.
THE ACTING COMMITTEE SECRETARY. Ah, Sir...
REP. M. A. B. SUANSING. Thank you, Mr. Claudio.
Also, I would also like to reiterate, Mr. Chair, if you compare it to the levy
being imposed by our peers, our counterparts in other ASEAN countries, this is much
lower, probably one-tenth to one-twentieth of what they are imposing as a... as a levy
on their plastic bags.
Thank you, Mr. Chair.
THE PRESIDING OFFICER. Alright. So, Mr. Cua, you are raising your hand?
MR. S. T. CUA. Yes, just very quickly, Sir.
THE PRESIDING OFFICER. Yes.
MR. S. T. CUA. As usual, the topic of plastics. You've probably noticed that
all of us probably have been buying online, and you can see the amount of bubble
wrap and plastics they use when they send the... of course, it's to protect our
products, but nobody is noticing the amount of plastic that they are using, 'no. I
mean, huge amount of plastic that they are using to deliver. Maybe you would like to
also include the, you know, tackle that problem po kasi later on, if sabihin na nating
talagang nag-grow ang online industry, then another new... you have to set another
new law for that if... or, you know, kasi the amount of plastic that they use is just too
much compared to shopping from a... on, you know, offsite... onli. .. offline store.
Thank you.
THE PRESIDING OFFICER. That's right. Mr. Lao.
THE ACTING COMMITTEE SECRETARY. Mr. Lao.
MR. LAO. Just a quick comment kay Mr. Claudio. The compostable plastics
and degradable plastic are two different types. Kaya sinasabi ko kanina, we need a

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 COMMITTEE ON WAYS AND MEANS
17 August 20221 JCO 1 V - 16

science-based approach because when you tell a normal consumer a compostable

bag or a degradable bag, hindi nila alam na magkaiba iyon. So, iyon lang. It's
important to note, 'no. And the paper bags, we have a life cycle analysis, and there's
a lot of science-based study already, paper bags are worse off than plastic bags. It
consumes a lot of energy, water, et cetera. So, it has the highest carbon footprint.
So, I think the alternative is... should not be paper bags.
THE ACTING COMMITTEE SECRETARY. Sir.
THE PRESIDING OFFICER. Alright. But...
THE ACTING COMMITTEE SECRETARY. Sir.

• THE PRESIDING OFFICER. ... Senior Vice Chair, can you confirm about the
issue raised by Mr. Claudio? Biodegradable plastic is not covered under your
proposed measure, isn't it? That's not subject to excise tax, biodeg ... biodegradable
plastic?
REP. M. A. B. SUANSING. Mr. Chair, as I mentioned a while ago, that is
currently not in the scope as we are only referring to sando and labo bags as per the
definition on the bill, but we could also solicit the wisdom of the resource persons if
that's something that we shall include as well.
THE PRESIDING OFFICER. Thank you, SVC Mikaela.
So, any comments from the...

•
THE ACTING COMMITTEE SECRETARY. Chair, Chairman.
THE PRESIDING OFFICER. Yes, ComSec.
THE ACTING COMMITTEE SECRETARY. Chairman.
THE PRESIDING OFFICER. Yes.
THE ACTING COMMITTEE SECRETARY. Opo. Mr. Jeremiah Sebastian has
been raising his hand. He is from ...
THE PRESIDING OFFICER. Alright.
THE ACTING COMMITTEE SECRETARY. ...the Pollution Control
Association of the Philippines po.
THE PRESIDING OFFICER. Alright. Mr. Jeremiah, you are recognized.
Please proceed.
MR. JEREMIAH DWIGHT C. SEBASTIAN (President, Pollution Control
Association of the Philippines, Incorporated). Yes, Sir. Good afternoon.
Just to clarify since na-mention na po iyong mga technology on
biodegradable, there are different kinds of technology. We ca ... iyong iba kasi, may nQ3
component lang na ina-add on petroleum-based products. So, synthetic materials as

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 COMMITTEE ON WAYS AND MEANS
17 August 20221 JCO 1 V - 17

some being referred, but there are some that is new technology, say bacteria-source,
like PHA, which is now the biodegradables of the... In Europe and other countries
like US, they have two categories now called "home compostable" types of plastic
and "industrially compostable" types of plastic, which requires a more stringent
composting facility to process it. It requires a higher temperature. So, just to
distinguish the two. So, there are technological options. But I think for our local
economy, having a circular economy for plastic bag is more beneficial for everyone
here long-term.
So, could ... beside... yes, we need to find taxes, but might I suggest also

• looking into options like requiring post-consumer recycled content in plastic bag to
encourage recyclability to address the environmental issue na... So, it's more of
behavioral modification, at the same time, it also convinces companies to make an
effort to complement the EPR. So, beside the tax point-of-view since the tax is, to be
honest, as our... mentioned, it's minimal that it might be absorbed or will be passed
down. But, to be honest, e, will it create a big impact if the end-consumer doesn't
really care about the plastic or ano. The point is we need to have a mechanism for
them to make it easy to return, at the same time, for our recyclers or even the plastic
manufacturers to recover them in an economical manner to recycle them. So, we
have to have some sort of mechanism for that to complement. And some sort of tax
can be used, but something also as an incentive to complement for those making an
effort, is ideal also.
THE CHAIRPERSON. I think... Mr. Chair...
THE PRESIDING OFFICER. Yes, Mr. Chair.
THE CHAIRPERSON. I think we've heard enough. There's no...
THE PRESIDING OFFICER. Yes.
THE CHAIRPERSON.... argument between circular because we are looking
after single-use. We are not after those plastics which are not described very
specifically in the bill. So, I think we have listed enough, and I think, in fact, there is a
consensus that lahat naman gusto natin wala na iyan. So, I think, at this point, in...
where the... the amounts that we are talking about are not egregious as to destroy
any industry, so to speak. So, in fact, the revenue impact here is only 1 billion. So,
which may... which most likely... because it's small, it's most likely be... to be... can
easily be transferred or can be passed on.
So, I think, Ria, your role is already well-positioned already. nO 4
REP. BROSAS. Mr. Chair, manifest lang ako...
 COMMITTEE ON WAYS AND MEANS
17 August 2022 I JCO I V - 18

REP. VERGARA. Yes, Mr. Chair.

THE PRESIDING OFFICER. So...
REP. BROSAS.... before si Ria ulit sa kaniyang ano... (Laughter)
THE PRESIDING OFFICER. So, the hono...
REP. BROSAS.... sa kaniyang role. (Laughter)
THE PRESIDING OFFICER. So, may we now ask the Minority...
REP. BROSAS. Mr. Chairman.
THE PRESIDING OFFICER. Alright.
REP. BROSAS. Yes.

• THE PRESIDING OFFICER. The Minority is recognized .

REP. BROSAS. Thank you, Mr. Chair. Thank you, Mr. Chairman, for the
opportunity na makapagsalita ang Minority.
Kaugnay po dito sa plastic tax, iyong concern namin dito ay iyong mechanism
talaga na hindi maipasa sa consumer, rna-pass on sa consumer, if ever, kasi, tulad
kanina, noong sinabi nga ng mga... both stakeholders, iyong mga gumagamit ay
mga manininda, 'di ba? Guma... iyong ulam kasi hindi mo iyan malalagay sa ano, e,
sa paper. Sa plastic po talaga iyon malalagay. Hindi naman sa lahat ng oras dala-
dala ng ano, ng manggagawa, halimbawa, iyong kaniyang baunan, pero better nga
kung may baunan. Kasi we believe naman, overall talaga, 'no, we would like it to be

•
regulated. Tapos, for certain environmental concerns, talagang gusto naman talaga
natin. Tapos, iyong plastic labo, tanong din namin iyan, e, last time, e, kay... naalala
ko kay Congo Ging Suansing, tinanong ko siya, iyong ano ba iyong major...
MS. SUANSING. Present.
REP. BROSAS.... contributor ng plastic. (Laughter) Yay! (Laughter) Plastic
wastes, 'di ba, parang ganiyan. Is it a plastic labo or sando bag? Bakit hindi natin din
i-include iyong iba pang mga plastics, iyong mga ganiyan, ano. Tinanong po natin
iyan. Tapos, maliit lang iyong revenues. And, again, ang sinasabi nga namin, we go
after doon sa major contributors tapos mga plastic ano talaga, 'no, corporations na
malalaki iyong kinikita para nang sa ganoon, iyong bente sentimo na madadagdag sa
every plastic na ipu-purchase nung ano, hindi sa kanila... hindi burden nung mga
maliliit na tao iyong ganoon. So, iyon naman iyong ... iyon naman iyong tinanong
namin, e. Tapos, kung may mechanism na iyon nga, hindi siya mapunta mapunta or
hindi siya rna-pass on sa mga consumers kasi parang kanina noong tinatanong ko
din po iyong ano, consumption-based tax ulit ito, e. Hindi ito corporate tax, ~di ba? nQ 5
So, iyan po iyong mga... iyan po iyong mga agam-agam namin diyan, Mr. Chair.
 COMMIITEE ON WAYS AND MEANS
17 August 20221 JCO 1 V - 19

Maraming salamat, Mr. Chair.

THE PRESIDING OFFICER. So...
THE CHAIRPERSON. Duly noted. (Laughter)
THE PRESIDING OFFICER. So, do we have questions from the Majority?
THE CHAIRPERSON. There is... there is a motion from the Majority, 'di ba,
Ria?
THE PRESIDING OFFICER. Yes, SVC Mikaela, what motion?
REP. M. A. B. SUANSING. I think, Mr. Chair, it's Representative Ria Vergara
who would make the motion.

• THE PRESIDING OFFICER. Alright.

REP. VERGARA. Mr. Chairman ...
THE PRESIDING OFFICER. Representative Vergara is recognized.
REP. VERGARA. Honorable... (Unintelligibleffechnical problem) Sir, yes.
THE PRESIDING OFFICER. Yes.
REP. VERGARA. Thank you, Sir.
Honorable Members of the Committee, with House Bill No. 220, authored by
Senior Vice Chair Mika Suansing and Representative Horacio Suansing, as a priority
measure of the House of Representatives, and having been previously filed and
approved on Third Reading last 18th Congress, we respectfully invoke Rule 10,

•
Section 48 of the Rules of the House of Representatives, and I move that the
measure be disposed of as a matter already reported.
THE CHAIRPERSON. Second.
REP. S. L. LAGON. I second the motion.
THE PRESIDING OFFICER. Any second? Okay, second. The motion, duly
seconded by Vice Chair Sonny Lagon, is there any objection? Hearing none, the
motion is approved. The Secretariat is directed to prepare the Committee Report.
Any proposed amendments to the provisions on Plastic Bags Tax Act will be
welcomed during the Plenary deliberations.
And, now, let me thank you, Chair Salceda, for the opportunity to preside and
return this duty to the ... our Chairman Salceda. Thank you.
At this juncture, Chairperson Joey Sarte Salceda presided over the meeting
THE CHAIRPERSON. Thank you.
And just for clarification, digital, it will be the responsibility of Congresswoman
Ria Vergara, who is brighter than my classmate and, of course, I think the... ,no, the nQ 6
digital will... Ted would be digital; si Ria would be PIFITA...
 COMMITTEE ON WAYS AND MEANS
17 August 2022 I JCO I V - 20

THE ACTING COMMITTEE SECRETARY. Sir .

THE CHAIRPERSON.... and then, Suansing .
THE ACTING COMMITTEE SECRETARY. Ah, Sir.
THE CHAIRPERSON. Yes, ComSec.
THE ACTING COMMITTEE SECRETARY. Sa Ease of Paying Taxes po si
Congo Ted Haresco, and si Ma'am Ria pO...
THE CHAIRPERSON. Okay.
THE ACTING COMMITTEE SECRETARY is back on digital.
THE CHAIRPERSON. Ease of Paying Taxes can you ... can you ... can you

• educate me, Madam ComSec?

THE ACTING COMMITTEE SECRETARY. Sir, sorry about that. Sir, Vice
Chair Ted Haresco will defend the Ease of Paying Taxes at the Plenary; Vice Chair...
Senior Vice Chair Mikaela Suansing will defend the PIFITA in the Plenary; and
Congresswoman Ria Vergara will defend the VAT on digital taxes... ah, VAT on
digital...
THE CHAIRPERSON. And the Plastics Act.
THE ACTING COMMITTEE SECRETARY.... ano, Sir, transactions.
THE CHAIRPERSON. And plastic tax too.
THE ACTING COMMITTEE SECRETARY. And the plastic tax po will be ably

•
defended by Rep. Mika Suansing. Uulit lang po ba iyon?
THE CHAIRPERSON. Okay. So, thank you. I think we will schedule a hearing
on Monday, essentially for PIFITA, to finally come up with the final form after all the
interventions by DOF, sudden interventions.
So, last Congress, we approved and passed a Committee Report, actually, on
mining fiscal regime. However, given the fact that we withdrew from the 1... EIPI, so
we'd rather form another TWG to address the fiscal regime for mining, and this will
essentially reset the... and the provision, the... I hereby appoint Ria Vergara as
Chair, Horacio Suansing, Mika Suansing, Carmen zamora, Robert Ace Barbers, and
Sergio Dagooc to the mining TWG on the fiscal regime for mining.
So, may we also invite everyone to physically meet the BIR and BOC, plus
those... nandiyan pa ba sila? Andiyan pa kaya iyan? Baka nag-uwian na. The... we
are supposed to meet at 2:00 p.m. at the Minority Room, but given that we've...
pagod na yata kayo lahat, 'no?
THE ACTING COMMITTEE SECRETARY. Sir, puwede daw po bang
maglambing?
 COMMIITEE ON WAYS AND MEANS
17 August 20221 JCO 1 V - 21

THE CHAIRPERSON. Ano daw?

THE ACTING COMMIITEE SECRETARY. Puwede po bang Wednesday
iyong meeting next week, given the PIFITA... the preparation for PIFITA?
THE CHAIRPERSON. Okay. Given ... so, everything on Wednesday,
including mining will be tackled ...
THE ACTING COMMIITEE SECRETARY. Thank you, Sir.
THE CHAIRPERSON. ... because these are also... Are there any other
suggestions from the floor?
REP. TV. Mr. Chair, is our meeting ... is our...

•
THE CHAIRPERSON. Allan ...
REP. TV. Yes, Mr. Chair.
THE CHAIRPERSON.... gusto mo mag... gusto mo mag ... gusto mong mag-
participate in any of the two TWG?
REP. TV. No, Mr. Chair. I would just ask if our meeting at two o'clock will
proceed or not with the DOF officials and... DOF and BOC officials?
THE CHAIRPERSON. Basically, BIR and BOC lang iyon, e.
REP. TY. Alright. So, are we... are we going to proceed with that meeting?
THE CHAIRPERSON. May I call on BOC? BOC, are you in Congress?
MR. MARONILLA. Mr. Chair, the Deputy Commissioner for AOCG, which is
also the officer-in-charge while the Commissioner is still COVID-positive, will be

• attending this me... the 2:00 p.m. meeting today, yeah, Your Honor. He's already...
THE CHAIRPERSON. Okay.
MR. MARONILLA.... on his way.
THE CHAIRPERSON. Lilia Guillermo, Ma'am.
MS. GUILLERMO. Good afternoon... ay, sorry. Good afternoon, Sir.
The Commissioner is already preparing, and they will... she will be attending
together with Deputy Commissioner... (UnintelligiblelTechnical problem)
THE CHAIRPERSON. Alright. So, everybody, all the Members of the
Committee on Ways and Means are invited to the Minority Room. Minority na talaga.
(Laughter) Inubos na kasi ng ano, e, Appro.
REP. BROSAS. Mr. Chair, Minority ka na ba? Nasa Minority ka, ah. That's my
turf. (Laughter)
THE CHAIRPERSON. So, everybody is invited to the Minority Room to
discuss any concern with the BOC and BIR. Okay, any issues, whe ... no matter how
parochial, you can ask them, okay, including PCSO even if we did not approve it.
 COMMITTEE ON WAYS AND MEANS
17 August 2022 I JCO I V - 22

So, thank you very much. For my favorite motion? Pinagod mo ako, Tonette,
ah.
REP. VERGARA. Mr. Chair, I move that we adjourn.
REP. S. L. LAGON. I second the motion.
THE CHAIRPERSON. Are there any objections? Hearing none... I hate you,
Tonette Tionko.
MS. TIONKO. (Laughter) Thank you.
THE ACTING COMMITTEE SECRETARY. Thank you.
THE CHAIRPERSON. Thank you ka pa, ha. (Laughter)

• MS. TIONKO. (Laughter) Walang veto, promise. (Laughter)

THE CHAIRPERSON. Walang veto. (Laughter)
REP. VERGARA. Thank you, Mr. Chair.
REP. M. A. B. SUANSING. Thank you, Mr. Chair.
THE ACTING COMMITTEE SECRETARY. Maraming salamat po.
REP. TV. Thank you, Mr. Chair.
REP. BROSAS. Thank you, Chair.
THE CHAIRPERSON. Thank you.

The meeting adjourned at 1:12 p.m.

• CERTIFICATION

Certified true and correct to the best of our knowledge and ability.

~s
Legislative Staff Officer VI
~
M.A:. ~SA
;. ::=::>
M. RAMIREZ
Legislative Staff Officer VI
(Sr. Legislative Minutes Officer III) (Sr. Legislative Minutes Officer III)

ERMY~~ANG
Legislative Staff Officer VI
~
EMERITA E. AVILA
Legislative Staff Officer VI
(Sr. Legislative Minutes Officer III) (Sr. Legislative Minutes Officer III)
 COMMITTEE ON WAYS AND MEANS
17 August 2022 I JCO I V - 23

~~
_~y C. OVILLA
Legislative Staff Officer VI
(Sr. Legislative Minutes Officer III)

100