The Department of Finance (DOF) has proposed to increase to 75 percent from 50 percent the minimum dividend remittances of state-owned companies as one of measures to raise revenues for the government’s additional economic stimulus spending.
Finance Secretary Carlos G. Dominguez III said they are planning to increase the mandatory dividend remittance of government-owned and -controlled corporations (GOCCs). He, however, said the planned increase requires amendments to the Dividend Law or Republic Act No. 7656.
In a letter to House Speaker Lord Allan Q. Velasco dated April 15, 2021, Dominguez said that GOCC dividends are among the possible funding sources for the proposed third stimulus package. The finance chief also revealed this at the Sulong Pilipinas forum Monday where he said the government is looking for sources of revenues for the proposed Bayanihan 3 economic stimulus being initiated by Congress.
Dominguez explained the estimated P370 economic stimulus measure being proposed by Velasco needs to be backed by “adequate revenue sources,” not by additional borrowings or deficit spending.
“We are currently looking at possibility of increasing the dividend rates remitted by government-owned or -controlled corporations to the National Government,” Dominguez said his letter.
Aside from increased minimum rate, Dominguez also proposed a provision allowing the government to collect additional dividends from accumulated earnings of GOCCs.
Currently, state firms are required to remit only half of their net income to the Bureau of the Treasury. Based on the DOF data, GOCCs contribute about P56 billion to the government coffers annually.
Earlier, Dominguez said that government will continue striking a “delicate balance” in their COVID-19 response programs.
Dominguez explained that efforts to provide substantial support to the economy amid the pandemic should not come at the expense of the government’s long-term debt sustainability.
He said the government’s flagship infrastructure plan will be the main force in the country recovery.
The finance chief also highlighted the need for the immediate passage of three economic measures now pending in Congress.
These bills are the amendments to the Foreign Investments Act, Public Service Act and Retail Trade Liberalization Act, which were all certified by the President as urgent.