WITH 187-14-3 votes, the House of Representatives on Monday approved on third and final reading the second of up to five planned tax reform tranches that cuts the corporate income tax (CIT) rate and removes fiscal incentives deemed redundant.
Among others, the House Bill No. 8083, or the “Tax Reform for Attracting Better and High-quality Opportunities” (TRABAHO) bill, will cut the CIT to 20% gradually from the current 30% in order to lure investments by putting the rate at par with much of Southeast Asia. At its current rate, the Philippines’ CIT is higher than those of Cambodia, Thailand and Vietnam which have a 20% rate as well as Singapore’s 17%.
Another key feature is a uniform tax incentive scheme to be administered by all investment promotion agencies, a five- to seven-year cap on provision of income tax holidays and removal of redundant perks that have been costing the economy hundreds of billions of pesos in foregone revenues annually.
Following the first package, Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) law that cut personal income tax rates on the one hand but removed several value-added tax exemptions as well as increased or added taxes on several items when it took effect last January, the Executive submitted at end-July the remaining proposed tax reforms to both chambers of Congress in hopes of securing legislative approval before lawmakers start focusing on the May 2019 mid-term elections starting next quarter. — Charmaine A. Tadalan