THE Department of Trade and Industry (DTI) continues to hope that the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) bill will be passed within the year after legislators signalled their unwillingness to pass it with elections looming.
“We hope to pass it in December, of course, with the provisions that we want,” Trade Secretary Ramon M. Lopez told reporters last week in Pasay City.
Key legislators have said TRABAHO is not a priority bill for the 17th Congress before it concludes in mid-2019.
The House of Representatives approved the bill, in the form of House Bill No. 8083, on third and final reading in September. The Senate has suspended its deliberations pending official government estimates on the bill’s impact on jobs.
The TRABAHO bill mainly seeks to reduce the corporate income tax (CIT) rate gradually from 30% currently to 20% by 2029 while repealing redundant incentives and limiting entitlements to a maximum of five years for industries included in the Strategic Investments Priority Plan.
Asked how later passage will affect the timetable for reducing the CIT, Mr. Lopez said: “Obviously, it will be delayed, so for out part we want the matter settled as soon as possible with the passage of the correct version of the bill.”
“New investors just want to know what the final structure will be,” he added, noting that discussions with businesses who have expressed interest to invest in the Philippines are not all that concerned about incentives.
“I don’t think they’re really concerned about the reform in terms of removing the perpetual nature and including a time bound policy. Everybody we talk to is not asking about those things. Even on other concerns, including political, Extra-Judicial Killings (EJK), inflation, these things are not brought up. All of their questions are basically about the state of the economy,” he added.
But while the timetable for the TRABAHO Bill’s passage might have to be adjusted, the DTI is still negotiating with the Department of Finance to tweak certain provision of the bill to unify their positions when they face the Senate.
Among these is the extension of the income tax holiday (ITH) perk to five years instead of the current proposal of three as well as the lengthening of the domestic input expense incentive to five years post-ITH.
Other changes sought by the DTI include the maintenance of value-added zero-rating for indirect and constructive exporters regardless of location; the reduction of the threshold to exempt an exporter from value-added tax to 70% exports from the proposed 90%; and the exemption of ecozone-registered projects from import duty similar to privileges enjoyed in freeports.
Senator Sherwin T. Gatchalian, who chairs the Senate’s Economic Affairs Committee, has said he hopes to continue deliberations on the TRABAHO bill as the Senate resumes session today. — Janina C. Lim