House approves entry of foreign professionals

Foreign doctors, lawyers, engineers, accountants, and other professionals may soon be allowed to render their services in the Philippines.

The House of Representatives approved Monday night two measures reforming the system of taxation on corporate earnings and financial transactions, and the grant of tax incentives or exemptions to businesses.

House Bill 300 seeks to amend Republic Act 7042, otherwise known as the Foreign Investments Act (FIA) of 1991.

Tarlac Rep. Victor Yap is the bill’s principal author, with Representatives Luis Raymund Villafuerte of Camarines Sur and Joey Salceda of Albay as co-authors.

Yap said his proposed law “aims to exclude the practice of profession from the coverage of the FIA of 1991 so as to attract foreign professionals to come to the country.”

“By allowing foreign professionals to practice in the country, they would be able to bring in technology and know-how from abroad and help create jobs for locals by attracting businesses that require highly skilled professionals,” he said.

The existing law bars foreign professionals from practicing here although they are allowed to assist their Filipino counterparts.

For instance, international human rights lawyer Amal Clooney was part of the legal team of former president Gloria Macapagal Arroyo when she was facing plunder charges before the Sandiganbyan.

The bill also proposes to reduce the number of direct local hires required of foreignowned small and medium businesses from 50 to 15.

“Operationally speaking, a small and medium-sized enterprise cannot immediately sustain a labor force of 50 employees. Thus, there is a need to lower the threshold of employment requirements to 15 direct local hires,” Yap said.

Another measure that was approved on third and final reading was Bill 304, which seeks to reform taxation on financial transactions.

Salceda is principal author of Bill 304, otherwise known as the proposed Passive Income and Financial Intermediary Taxation Act or PIFITA.

PIFITA seeks to reduce the 20-percent final tax on interest income from savings and other passive investments to 15 percent.

The proposed law also removes the requirement to pay a certain amount of documentary stamps for those obtaining documents like diplomas, transcripts of records, certificates, and marriage licenses.

Millions will benefit from the reduction of the tax on interest income and the scrapping of the documentary stamp tax (DST) on important documents, Salceda said.

He said no DST would also be required for domestic money transfers.

“This will reduce the cost of sending money to relatives in the provinces,” he said.

Salceda said PIFITA will make taxation “simpler, fairer, more efficient, and regionally competitive.”

On the other hand, the proposed Corporate Income Tax and Incentives Reform Act or CITIRA, was approved on second reading.

It would reduce the tax on corporate earnings from 30 percent to 20 percent over five years, and rationalize tax exemptions being enjoyed by more than 4,000 businesses.