MBC seeks predictability in ongoing tax overhaul

The Makati Business Club (MBC) is seeking for predictability in the government’s ongoing tax reform program, the second package of which will include rationalization of fiscal incentives and reduction of corporate income tax (CIT) rates.

“Businesses support the objectives of the government and want to work with the Department of Finance (DOF) to ensure that resulting measures will be fair, enhance revenue, and attract investment,” MBC chair Edgar Chua told The STAR.

Chua said businesses need predictability, which is why some business leaders are concerned about the lack of predictability and certainty under TRAIN Package 2, particularly in imposing conditions before lowering CIT rate which could discourage potential investors.

“Some suggestions are to provide definite timetable for reduction of CIT instead of having conditions that trigger it. (There should also be) clarity on sunset provisions for future incentives and basis for future incentives, as well as simplification and fast tracking of tax refund mechanism,” he said.

The MBC last week hosted a roundtable meeting with Finance Undersecretary Karl Chua to discuss the proposed reforms under the Tax Reform for Acceleration and Inclusion (TRAIN) Package 2.

The second package is intended to cover CIT, fiscal and non-fiscal incentives, and tax facilitation.

The DOF’s proposal includes lowering the CIT rate to 25 percent while broaden tax base by making incentives more accountable.

For its proposed rationalization of fiscal incentives, the DOF intends to make incentives performance-based, targeted, time-bound and transparent.

“We need to come up with solutions in raising revenues and plug the leaks, but in the process make sure that legitimate investors are not severely impacted and that we attract more investors to the country,” Chua said.