Treasury: P3.3B to P13.2B in foregone revenues seen from FIST bill

The Bureau of the Treasury (BTr) is expecting billions of pesos in foregone revenue to be incurred by the government from the proposed Financial Institutions Strategic Transfer Act (FIST).

During the Senate committee on bans, financial institutions and currencies hearing on Wednesday, National Treasurer Rosalia de Leon said the agency estimates that in terms revenues to be foregone from tax incentives and fee exemptions, “Our estimate, range from P3.3 billion to about P13.2 billion.”

“Assumptions were based on the earlier experience during the Asian Financial Crisis,” De Leon said.

The Senate Bill No. 1594 or FIST aims to create specialized asset-managing corporations that would acquire “bad loans and stagnant properties” from embattled financial institutions.

Under the proposed measure, a FIST corporation may invest in, or acquire non-performing assets (NPAs) from financial institutions; and engage third parties to manage, operate, collect and dispose of acquired NPAs.

To foster the creation of these corporations, tax incentives and fee exemptions - such as payment of documentary tax stamp, capital gains tax, creditable withholding taxes, and value-added tax - will be given.

Despite the foregone revenues, de Leo said the BTr and its parent agency the Department o Finance strongly supports the bill and “in fact, pushing for its inclusion under the Bayanihan 2.”

“We would highly appreciate if the bill can be passed this September together with the Bayanihan 2 to be able to really maximize the benefits of all the emergency measures the government is taking to fight the pandemic,” she said.

The Bureau of Internal Revenue, an attached agency of the DOF, expressed opposition for the bill, particularly the tax exemption provisions, since it will adversely affect the taxman’s collection.

The Bankers Association of the Philippines (BAP), meanwhile, supports the FIST bill.

“We believe this will prepare the banking sector for the expected increase in non-performing assets arising from the community quarantines we have implemented to contain the pandemic,” BAP director Benjamin Castillo said.

The BAP projects the amount of non-performing loans in banks alone may increase from the present 5% to as high as 20% of total loans in the coming months.

Senator Imee Marcos, chair of the committee on economic affairs and the bill’s author, underscored that NPAs of financial firms would likely pile up due to the repercussions of the COVID-19 pandemic.

The counterpart FIST bill in the House of Representatives has been approved on third and final reading. — RSJ, GMA News