THE Department of Finance (DoF) is confident that Congress can meet the department’s timetable for approving four more tax reform packages within 2018, following the filing of the package reducing corporate tax rates last week.
“With the timely filing of the measure in the House, we are optimistic that this proposal, along with the remaining tax reform packages, will be approved by the Congress within the year,” Finance Secretary Carlos G. Dominguez III said in a statement yesterday.
The DoF plans to submit to the House of Representatives four more tax proposals this year, with a view to gaining its approval before the midterm elections in 2019.
These proposals include further increases to tobacco and alcohol taxes; reforms to the property tax and valuation system; restructuring taxes on capital and financial income; an overhaul of taxes in the mining sector; and higher tax rates on luxury goods such as jewelry and yachts.
House ways and means committee Chairman Representative Dakila Carlo E. Cua, along with Representatives Aurelio D. Gonzales, Jr., and Raneo E. Abu filed House Bill No. 7458 on March 21, before the session adjourned for a seven-week break.
The bill mainly proposed an annual 1% cut in corporate tax rates, from 30% to 20% starting 2019, while removing tax incentives in areas not included in the Strategic Investment Priorities Plan (SIPP).
The bill diverged from the DoF’s proposal to Congress, submitted on Jan. 16, which proposed 1% cuts to the corporate tax rate up to 25%, on the condition that tax collection agencies raise the equivalent of 0.15% of gross domestic product (GDP), or P26 billion from the rationalization of tax incentives.
Mr. Cua said that the committee removed the condition attached to lowering the corporate tax rate to remove potential uncertainty for investors.
“The bill we filed aims to decisively lower the corporate income tax rate thereby boosting the competitiveness of the Philippines. It gives a definite timeline and schedule of reduction of the business tax rate,” the legislator said in a mobile phone message.
“This sends a strong signal to the world that the Philippines is and will continue to be a top investment destination,” he added.
The bill also caps tax holidays at five years, designating a Fiscal Incentives Review Board to administer all incentives, provides for a 50% tax allowance for qualified capital expenditures, along with varied rates of tax deductions for research and development, training, labor expenses, infrastructure development, and reinvestment. It also simplifies the administration of allowable deductions and tax payment processes.
The bill follows the Tax Reform for Acceleration and Inclusion law, or Republic Act 10963 enacted on Dec. 19, which cuts personal income, estate and donor tax rates, removes some value-added tax exemptions, increases taxes for automobiles, fuel, tobacco, minerals, and imposes a new tax on sugar-sweetened beverages and cosmetic procedures. — Elijah Joseph C. Tubayan