After prompting lower income taxes, the government’s tax reform program is looking to reduce corporate income tax rates as its second package has now been yielded to the Congress.
The comprehensive tax reform program’s (CTRP) Package 2 was formally submitted on January 15, the first regular session after the year-end recess, the Department of Finance (DOF) said in a statement Tuesday.
The second package was initially targeted to be submitted October of last year, but was delayed as the first package, which has been put into effect just recently, was prioritized.
According to the DOF, Package 2 “proposes to gradually lower the CIT rate from 30 to 25 percent while modernizing incentives for companies to make these ‘performance-based, targeted, time-bound, and transparent’”.
The department also noted that this installment of the CTRP is “designed to be revenue-neutral”.
It has also been pointed out that the Philippines has the highest income tax rate in Southeast Asia.
In terms of efficiency in collection, the country is in the lower ranks. The DOF said that it is due to a “flawed and outdated” system that gives companies tax incentives.
Finance Undersecretary Karl Kendrick Chua said that the second package aims to make sure that the incentives given to businesses create employment opportunities, boost the economy, and regulate tax perks.
2015 data, cited by the DOF, show that income-tax holidays and special rates account for P86.25 billion of revenue losses while P18.4 billion is attributed to custom duty exemptions.
With this, Package 2 endeavors to manage tax holidays and other benefits with no time limits.