IBP bucks move to slash tax deductions on entertainment expenses

The Integrated Bar of the Philippines (IBP) has branded as "unconstitutional" the plan of the Department of Finance to provide a ceiling on tax deductions on the entertainment, amusement and recreation expenses of taxpayers.

"This proposal is inequitable and unconstitutional because of the arbitrariness of the ceiling imposed and the failure to take into account the different circumstances of the taxpayers," said lawyer Teofilo Pilando Jr., IBP president.

"This clearly violates the Constitution which provides that the rule of taxation shall be uniform and equitable," he added.

In a position paper, the IBP said that the proposal, which seeks to implement a provision of the Tax Code of 1997 is not valid as it "overrides the National Internal Revenue Code."

"While it is within the Finance Secretary’s power to issue regulations such as providing ceilings on entertainment expenses and the like, this must not override the very law they seek to apply and implement," stressed Pilando.

The position paper notes that: "providing a unitary ceiling on said expenses equivalent to one half of the expenses actually paid or incurred in the taxable year is unreasonable and fails to take into account the needs as well as the special circumstances, nature and character of the industry, trade, business or profession of the taxpayer as provided for in the NIRC."

"A rule broader than the statute empowering the making of rules cannot be sustained," continued the IBP paper.

It also argued further that "regulations are only valid only as subordinate rules and when found to be within the framework of the policy which the legislature has sufficient designed."