DOF: Private sector groups back corporate tax reform
MANILA — More business groups have thrown their support behind the Duterte administration's proposed corporate tax reform, the Department of Finance said Wednesday, amid concerns by some industries that the measure could drive away investments.
House Bill 7458 provides for gradual and conditional cuts in the corporate income tax rate from the current 30 percent to 20 percent, as well as the modernization of investment incentives by ensuring that only qualified industries are given fiscal perks.
Corporate tax reform comprises Package 2 of the Duterte administration's Comprehensive Tax Reform Program.
Citing a report from its Strategy, Economics and Results Group, the DOF said five business associations sent letters of support to Finance Secretary Carlos Dominguez III and Undersecretary Karl Kendrick Chua for these proposed reforms.
Among the private sector groups that backed Package 2 was the Management Association of the Philippines, which said the proposal “will help the country become more competitive with the rest of the world.”
“[Package] 2 is another milestone initiative for the government and a bold move that we believe will create a positive impact for all. The MAP commits its continuing support for the passage of [Package] 2,” the MAP said.
Meanwhile, other groups that also agreed with the DOF-backed measure include: the Federation of Indian Chambers of Commerce (Phil.) Inc.; the Federation of FilipinoChinese Chamber of Commerce and Industry Inc.; the Rural Urban People's Linkages; the Samahang Industriya ng Agrikultura; and various organizations under the Participatory Governance Cluster–Open Government Partnership.
CUTS IN FISCAL
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BMI research earlier warned that investments could slow over the near-term amid “uncertainties” over the government's proposed conditional corporate tax reduction and repealing of fiscal incentives.
The unit of Fitch Group also said that while the proposed tax reforms may be fiscally prudent, it will likely make the Philippines less competitive versus its regional peers.
But Dominguez said incentives are not the sole drivers for investments, citing the Duterte administration's efforts to attract investors by maintaining peace and order, wiping out corruption and eliminating red tape.
The Finance chief also pointed out that the Philippines gives out the most generous tax incentives because “they are granted forever”—a practice that he said “erodes both accountability and performance.”
(Philstar.com)