December 6th, 2022
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) led the House tax panel in approving the tax provisions of the Maharlika Investment Fund Act today, in preparation for the bill’s discussion in the House floor. The tax provisions approved today were provisions drafted by the tax committee’s team and were already adopted in the technical working group (TWG) prior to the meeting.
In a statement, Salceda said that the tax provisions ensure that the benefits of the tax savings go purely towards the investment fund, increasing potential returns for the SSS and the GSIS.
“Some P680 million in tax savings will inure to the fund every year as a result of this exemption. That goes towards making the SSS and GSIS funds more robust. That means more funds for pensions,” Salceda said.
Salceda also reassured members of the Minority in the House tax committee that all concerns raised on the provision will be considered, as the House TWG version “is still evolving.”
Under the provision which Salceda proposed in the TWG, a safeguard ensures “that the exemptions granted herein shall be utilized actually, directly, exclusively and solely for the transactions of or involving the MWFC and MWF, and not for the purposes of MWFC executives and/or employees, third parties, and other distinct taxable entities.”
Salceda says this ensures that the Fund will not be used as a pass-through to allow others to evade taxes.
Salceda proposes new safeguards
Salceda also proposed new safeguards to the mother committee, the Committee on Banks and Financial Intermediaries, which he hopes will make the bill “more airtight.”
As a general principle, Salceda introduced an amendment that “All transactions of the MWFC shall abide by the arm’s length principle and the prudent person rule.” This ensures that the Fund does not take positions that disadvantage it.
On Section 16, on the independent directors, Salceda proposed adding a proviso “that at least one independent director shall be an SSS or GSIS member or pensioner.” This seeks to address the concern on pensioner representation in the Fund’s governance.
On the exemption from the GOCC governance Act, Salceda proposed still placing the Fund in the coverage of “Sections 19, 25, and 26 on the fiduciary duties of the board and officers, full disclosure, and special audit.”
Meanwhile, on the exemption from the Procurement Law, Salceda proposes to limit exemption to “pertaining to minimum prescribed periods for stages of procurement and to restrictions on foreign or foreign-owned contractors.”
“Of course, we are always open for discussions and for enhancements to the bill. This is legislation. As TWG Chair, my job is to refine the proposal. Any reasonable input helps.” Salceda said.