TMAP asks Senate to offer 8% tax rate only to small businesses
THE TAX management industry said an option to pay an 8% tax rate on gross sales should be reserved for smaller firms, amid Senate legislation that allows the self-employed and professionals to avail of the rate.
In a position paper addressed to the Senate Committee on Ways and Means, chaired by Sen. Juan Edgardo M. Angara, the Tax Management Association of the Philippines (TMAP) said: “We believe that the 8% final income tax… should only apply to micro and small businesses to support and encourage the growth of these sectors.”
TMAP also asked the Senate, which is deliberating Senate Bill No. 1592, the chamber’s version of the government’s tax reform program, to apply the 8% optional rate to those not exceeding the P3 million value-added tax threshold on gross sales.
TMAP said the legislation as written would defeat the principles of fairness and equity laid out by the Finance department, as those professionals earning more would pay the same rate as those earning less.
“Hence, TMAP suggests that the option should only be available to those not exceeding the proposed value-added tax threshold of P3 million gross sales or gross receipts.”
TMAP also asked the Senate to defer all new tax adjustments that were not in the original version proposed by the Department of Finance as they need more review.
These include the higher 20% tax on interest and dividend income, as well as the tax on capital gains on unlisted stocks from the current 10%.
“We propose that further study be made on this proposal. If increased to 20%, the Philippines would be the highest vis-a-vis its ASEAN (Association of Southeast Asian Nations) neighbors where most countries do not impose income tax on dividend payments to individuals,” TMAP said.
The measures are part of the Finance department’s comprehensive tax reform program, but are included in latter packages that are expected to be proposed to Congress next year.
In its current configuration, the Senate version of TRAIN only nets P59.9 billion, below than the House of Representatives’ approved P133.8 billion — which is programmed in the 2018 budget. —