DOF submits CTRP Package 2 to Congress

THE Department of Finance (DOF) has formally submitted to the House of Representatives this week the second package of the Duterte administration’s Comprehensive Tax Reform Program (CTRP) that aims to reduce corporate income tax (CIT) rates and modernize fiscal incentives to investors.

As committed earlier by Secretary Carlos Dominguez III last year, the DOF submitted this tax reform package through the Office of the Speaker upon the resumption on January 15, 2018 of the second regular session of the Congress following its yearend recess.

The Constitution provides that all revenue measures should emanate from the House of Representatives.

Package 1 of the CTRP, also known as the Tax Reform for Acceleration and Inclusion Act (TRAIN), was signed into law by President Duterte last December 19, 2017. It slashed personal income tax rates--the first time that the government did so by law-while raising additional revenues for infrastructure and social services through the repeal of several non-essential exemptions to the value-added tax (VAT); adjustments in the excise tax rates for fuel, coal and automobiles; and a tax on sugarsweetened beverages among other measures.

The CTRP’s Package 2, which the DOF designed to be revenueneutral, proposes to gradually lower the CIT rate from 30 to 25 percent while modernizing incentives for companies to make these "performance-based, targeted, time-bound, and transparent," Finance Undersecretary Karl Kendrick Chua said.

Chua said that through this tax reform package, the government would be able to ensure that incentives granted to businesses generate jobs, stimulate the economy in the countryside and promote research and development; contain

sunset provisions so that tax perks do not last forever; and are reported so the government can determine the magnitude of their costs and benefits to the economy.

He said incentives enjoyed mostly by big businesses such as income tax holidays and other perks with no time limits need to be corrected as it is costing the government over P300 billion annually in foregone revenues.