Phl’s cor­po­rate tax re­form seen to draw in more FDIs

The Freeman - - BUSINESS - — Carlo S. Loren­ciana

The cor­po­rate in­come tax re­form now be­ing pur­sued by the gov­ern­ment is seen to in­vite more for­eign in­vest­ments into the coun­try, a tax ex­pert said.

Ray­mond Abrea, pres­i­dent of Asian Con­sult­ing Group, the re­form is a wel­come de­vel­op­ment for both lo­cal and for­eign cor­po­ra­tions.

"Our in­come tax will be more com­pet­i­tive across Asia Pa­cific re­gion, es­pe­cially af­ter low­er­ing per­sonal in­come tax un­der the pack­age 1 of TRAIN law," the tax ex­pert told The FREE­MAN.

"I fully sup­port the low­er­ing of cor­po­rate in­come tax from 30 per­cent to 25 per­cent or even 20 per­cent since our ASEAN neigh­bor coun­tries are also low­er­ing cor­po­rate in­come tax down to 15 per­cent," Abrea ex­plained.

Equally im­por­tant, he also raised the need to ra­tio­nal­ize the coun­try's fis­cal incentives ex­tended to se­lect-in­dus­tries and eco­nomic zones so it will up­hold a fair and just tax sys­tem among all cor­po­ra­tions.

"Def­i­nitely, it will en­cour­age more for­eign in­vest­ments and boost eco­nomic ac­tiv­i­ties as more do­mes­tic cor­po­ra­tions will have pas­sive in­vest­ments to ex­pand their busi­ness op­er­a­tions," Abrea ex­plained.

In the end, more taxes will be col­lected for the gov­ern­ment, he added.

The tax re­form ad­vo­cate is also look­ing for­ward to the ap­proval of TRAIN's Pack­age 1A in Congress next month.

"I'm re­fer­ring to the gen­eral and es­tate tax amnesty which will help erring tax­pay­ers to pay their back de­fi­ciency taxes from un­de­clared in­come and es­tate," he said.

"This will not only in­crease col­lec­tions with­out the tra­di­tional BIR au­dit which is prone to com­pro­mises or ha­rass­ment, it will also al­low BIR to fo­cus on its other pri­or­ity pro­grams like in­dus­try pro­fil­ing, risk-based au­dit, broad­en­ing tax­payer base, au­to­ma­tion of tax ad­min­is­tra­tion and com­pli­ance in­clud­ing ac­cred­i­ta­tion of third party soft­ware providers and mo­bile ap­pli­ca­tions to im­prove the ex­pe­ri­ence of tax­pay­ing pub­lic in fil­ing and pay­ing their taxes," Abrea fur­ther ex­plained.

Cor­po­rate tax re­form com­prises Pack­age 2 of the Duterte ad­min­is­tra­tion’s Com­pre­hen­sive Tax Re­form Pro­gram (CTRP).

The Depart­ment of Fi­nance is tar­get­ing to in­tro­duce this year the rest of the CTRP pack­ages that mainly cover prop­erty and cap­i­tal in­come tax­a­tion.

HB 7458, au­thored by Deputy Speaker Ra­neo Abu, Deputy Ma­jor­ity Leader Aurelio Gon­za­les and Rep. Dak­ila Carlo Cua, who chairs the House ways and means com­mit­tee, was filed last March 20. It is ex­pected to be re­ferred to the ap­pro­pri­ate com­mit­tee that will de­lib­er­ate on the mea­sure when the Congress re­sumes ses­sion on May 14.

The bill pro­vides for a one-per­cent­age point re­duc­tion in the cur­rent 30 per­cent CIT ev­ery year for do­mes­tic cor­po­ra­tions, res­i­dent for­eign cor­po­ra­tions and non-res­i­dent for­eign cor­po­ra­tions start­ing 2019, pro­vided that the cut would not reach lower than 20 per­cent, while mod­ern­iz­ing fis­cal incentives to make them per­for­mance-based, tar­geted, time bound, and trans­par­ent.

Sim­i­lar to the ver­sion pro­posed by DOF and Depart­ment of Trade and In­dus­try, the bill also aims to for­mu­late a three-year Strate­gic In­vest­ments Pri­or­ity Plan (SIPP) to en­sure that only in­dus­tries that pro­vide pos­i­tive spillover to the econ­omy, based on rig­or­ous cost-ben­e­fit anal­y­sis, are given incentives.

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