DOF hopeful on approval of Tax Reform Package 2 before 2019 polls

CLARK FREEPORT — The Department of Finance (DOF) is hopeful that Congress will pass Package 2 of the Comprehensive Tax Reform Program before the 2019 midterm elections.

Package 2 will revisit the Philippine tax incentive system in corporate firms since the country has been the most generous in grating incentives in the Southeast Asian Region.

Speaking before Central Luzon stakeholders during the recent Philippine Economic Briefing, Finance Assistant Secretary Ma. Teresa Habitan said proposed reforms include lowering of the corporate income tax (CIT) rate.

“Beginning January 1, 2020, reduce the CIT rate by 1 percentage point for every 0.15 percent of Gross Domestic Product (GDP) or P26 billion in 2018 reduction of investment tax incentives two years ago. The goal is to reduce the CIT rate from 30 percent to 25 percent by 2022 while expanding the tax base by 0.75 percent of GDP or P130 billion in 2018 prices),” she explained.

DOF is also proposing the repeal of 123 special laws on investment tax incentives and consolidate into a single omnibus incentives law.

“We are likewise proposing the repeal of National Internal Revenue Code exemptions of Government Owned and Controlled Corporations; proprietary educational institutions and hospitals; regional headquarters; regional office headquarters; income of resident foreign corporation from foreign currency transactions; nonresident cinematographic film owner, lessor or distributor; and owner or lessor of vessels, aircraft, machineries, and other equipment,” the official disclosed.

DOF is proposing for a rationalized investment tax incentive wherein there is a single menu of incentives applicable to all investment promotion agenci es.

“Only new investment/ activities will be granted income tax incentives. Expansions are signs of profitability and need not be given incentives,” Habitan clarified.

The government will grant one-year relocation incentive for firms moving out of Mega Manila and superior incentives for lagging, conflict and calamity-stricken regions.— Carmela Jane F. Villar/ PIA-3