THE HOUSE ways and means committee approved the Department of Finance’s (DoF) second tax reform package on Tuesday, Aug. 7.
The unnumbered substitute bill, now known as the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO), will now be up for plenary debates at the House of Representatives after it was approved by the committee during the sixth public hearing on Tuesday.
The bill now proposes to cut the corporate income tax rate from 30% to 20% gradually, or a 2% deduction every other year beginning 2021 until 2029.
However the President can accelerate the pace of the lowering of tax rates when adequate savings are realized from the rationalization of tax incentives.
It also proposed to overhaul fiscal incentives to an 18% preferential rate on net income limited for five years and only eligible for industries included in the Strategic Investment Priorities Plan (SIPP) with a sunset period of two to five years depending on the length of validity of tax perks in firms’ existing contracts with investment-promotion agencies (IPAs).
This is from the current 5% tax on gross income in lieu of all other national and local taxes granted by various IPAs, and are enjoyed in perpetuity. — Elijah Joseph C. Tubayan