Senate to go through corporate tax reform with a ‘fine-toothed comb’
THE MEASURE that will reduce the corporate income tax rate to 20% by 2029 from 30% currently and overhaul fiscal incentives will go through a “fine-toothed comb” in the Senate, Majority Leader Juan Miguel F. Zubiri said on Monday, following the bill’s approval in the House of Representatives late last week.
“We will go through it with a fine-toothed comb. It’s going to be different from the House of Representatives, where it’s a numbers game. Here, each and every one of the Senators will have to look into these provisions,” Mr. Zubiri told reporters.
The House of Representatives on Friday approved on third and final reading House Bill No. 4157, or the “Corporate Income Tax and Incentives Rationalization Act (CITIRA).” The bill forms part of the administration’s comprehensive tax reform program (CTRP).
Mr. Zubiri said that amendments eyed by the Senate includes extending the “sunset” period for all incentives by five to seven years as opposed to the two to five years provided under the House version.
He also said the Senate plans to increase the gross income earned (GIE) rate to seven percent from the current five percent.
“As far as I’m concerned we will push for a longer time for transition because, apparently, the House mentioned only between two to five years. We’re going to push between five to seven years, a longer transition period which is requested by different chambers of commerce,” Mr. Zubiri said, citing among others the European Chamber of Commerce of the Philippine, Japanese Chamber of Commerce and Industry of the Philippines and the American Chamber of Commerce of the Philippines.
“We’re also looking at raising the gross tax payment from five percent to seven percent.”
The House bill provided a two-year transition period for locators already enjoying the five percent GIE for over 10 years, three years for those who have availed it for five to 10 years and five years for those below five years.
“Let’s just review first what’s mentioned in the CITIRA. We’re having a few hearings on the CITIRA this week. Maybe after those hearings, we can be clarified on what were the issues, what were taken out, and what were left behind,” he said.
“We have to strike a balance between companies that may leave the country due to the loss of these incentives, at the same time revenue for government and income generated by other industries because of the lowering of the income tax from 30% to 20%.”
The Senate Ways and Means committee begins on Tuesday tackling the second CTRP package which is the proposed CITIRA, and expects to conclude committee deliberation on package two-plus, which will increase excise tax rates on alcohol products and e-cigarettes.
Other remaining CTRP packages include proposals to provide a single framework for real property valuation and assessment and to simplify the tax structure for financial investment instruments, which were all among the measures mentioned by President Rodrigo R. Duterte in his July 22 fourth State of the Nation Address.
The government has so far enacted Republic Act No. 10963, which slashed personal income tax rates and increased or added levies on several goods and services; RA 11213, the Tax Amnesty Act, which grants estate tax amnesty and amnesty on delinquent accounts left unpaid even after being given final assessment; and RA 11346, which will gradually increase excise tax on tobacco products to P60 per pack by 2023 from P35 currently.
Sought for comment, Trade Secretary Ramon M. Lopez told reporters on Monday that “there is a bit of revenue contribution or improvement if we are going to extend the transition which we are working on with the DoF (Department of Finance) as a relief.”
“We can consider adjusting the GIE in the meantime kasi ang pinu-push is two to five years. I heard also from Senator Zubiri there that they’d like to push for a longer transition to soften the landing.”
The CITIRA is also among the measures proposed in July by 14 local and foreign business groups to the Office of the President and the 18th Congress. — Charmaine A. Tadalan
