Lower CIT on reduced incentives
DOF to submit to Congress today CTRP Package 2
The Department of Finance (DOF) will submit to the House of Representatives today the second part of the Comprehensive Tax Reform Program (CTRP) that once passed into law will lower corporate income tax (CIT) as government seeks to limit fiscal incentives to businesses.
Finance Secretary Carlos G. Dominguez III said last week that the department was “just putting the final touches” on the second tax reform package, but he assured their proposal will be transmitted to the House leadership by four o’clock today.
Under the DOF’s draft CTRP package two, key features of the bill include lowering the corporate income tax to 25 percent from 30 percent and rationalization fiscal incentives for some businesses.
Only industries that meet the criteria based on performance, transparency and target would have their incentives retained, the DOF proposed.
The DOF also wants a sunset provision for existing incentives, which is a maximum of five years. Under the proposal, the coverage of the Fiscal Incentives Review Board should include all incentive recipients, from state corporations to enterprises within economic zones.
While the DOF is targeting to submit the bill with a revenue-neutral assumption, Dominguez said he is open to accommodate other proposals from the lawmakers, saying they have “no choice” if Congress decides to include other measures in package two.
“I mean just like the other one [first tax reform law], we will make a case for it then they will decide how we will move forward,” Dominguez told reporters in a recent interview at the DOF headquarters.
Asked if the DOF was not 100 percent sure that the second package will indeed end-up revenue-neutral, Dominguez replied “of course.”
Manila Bulletin Business sources said a number of senators will push for the inclusion of higher sin tax on cigarettes in the DOF’s CTRP package two proposal.
Dominguez said that the second part of the CTRP along with the succeeding tax reform packages are crucial to maintaining the government’s sound fiscal position and keeping its budget deficit not more than three percent of gross domestic product (GDP).
“If Congress does not pass sufficient tax reform, either the deficit will be breached or spending needs to be cut,” Dominguez warned.
Finance Undersecretary Karl Kendrick T. Chua, meanwhile, said the CTRP package two will be submitted to House Speaker Pantaleon D. Alvarez today and will be referred to the chamber’s committee on ways and means after.
“Usually the committee will review it first and then endorse it to the chair, the chair will file it, then it has the House number and then it will be read again in the plenary and referred to the committee. There’s a process,” Chua said.
The bill’s sponsor is normally the head of the ways and means, Chua said, referring to Quirino Representative Dakila Carlo E. Cua.
President Rodrigo R. Duterte earlier asked the DOF to immediately submit to Congress early this year the CTRP’s package two in his bid to complement the expected incremental revenues from the first package.