TEN business and professional organizations asked the 18th Congress to approve the measure lowering the corporate income tax and streamlining fiscal incentives.
Senate Bill No. 1357, sponsored by Senator Pilar Juliana S. Cayetano, proposes to gradually reduce the corporate income tax to 20% by 2029, from the current 30%, which is the highest rate in Southeast Asia.
“The scheduled CIT (corporate income tax) rate reduction is fixed for the first five years to reduce uncertainty, which is detrimental to doing business,” the groups said in a joint statement Thursday.
It was signed by the Anvil Business Club, Bankers Association of the Philippines, Federation of Filipino Chinese Chambers of Commerce and Industry, Financial Executives Institute of the Philippines, Foundation for Economic Freedom, Management Association of the Philippines, Makati Business Club, Organization of Socialized Housing Developers of the Philippines, Subdivision and Housing Developers Association and University of the Philippines School of Economics Alumni Association.
The measure also grants an income tax holiday of two to four years. After this, companies will have to pay a special corporate income tax of 8% this year; 9% in 2021; and 10% in 2022 based on gross income earned (GIE), in lieu of all national and local taxes.
At present, companies enjoy a four to six-year income tax holiday, and afterwards have to pay 5% GIE.
The bill also provides a 2-7 year transition period for registered businesses currently availing of the 5% GIE.
“An extended transition period of seven years is provided to certain firms under the gross income earned (GIE) tax regime to adjust their operations and prevent dislocation,” the groups also said.
They also support the move to keep in place the one-stop shop approach for registered enterprises.
The groups said the proposed Corporate Income Tax and Incentives Reform Act (CITIRA) now in the Senate will “help create an enabling environment for Filipino businesses, generate quality jobs, and spur growth that is felt throughout the entire archipelago.”
They asked the Senate and the House of Representatives to move “quickly and decisively,” putting an end to the uncertainty that has lingered since the proposal was made in the 17th Congress.
The bill is being discussed at plenary level in the Senate, which has one week left before it adjourns for its March 14-May 4 break.
Senate President Vicente C. Sotto III has said the measure may be set aside, should the ongoing coronavirus outbreak require the Senate to come up with emergency legislation.
CITIRA forms part of the administration’s comprehensive tax reform program, alongside proposals to simplify the tax structure for financial instruments, provide a uniform framework for real property valuation and assessment and increase the government share from mining revenue.
The government has so far enacted a tax measure that slashed personal income tax rates and increased or added levies on several goods and services — the main component of the tax reform package — and one that grants an estate tax amnesty and an amnesty on delinquent accounts left unpaid even after final assessment. It has also increased excise taxes on alcoholic beverages and conventional and electronic cigarettes. — Charmaine A. Tadalan