RP tax breaks for corporations expected soon
THE PHILIPPINE Department of Finance will pitch corporate-income-tax reforms to Congress by the second half as it is optimistic of passing by midyear the first package aimed at easing the burden on income-tax payers while increasing taxes on consumption.
The House of Representatives Ways and Means Committee was expected to approve yesterday House Bill No 4774. It contains the DOF’s proposal to lower personal income taxes, broaden the value-added-tax (VAT) base by cutting down on exemptions, increase excise taxes on petroleum and automobiles, and reduce the estate and donors’ tax rates.
The DOF will “work very hard” such that when Congress resumes in May after its break starting at the end of this week, the first tax-reform package will be passed |by June or July, Finance Undersecretary Karl Kendrick T Chua said this past weekend.
As for the second package that will introduce corporate tax breaks while rationalising fiscal incentives, the DOF will come out with the proposal by the third or fourth quarter, after analysis of data mandated under the Tax Incentives Management and Transparency Act (Timta), Chua added.
Under the second package, the DOF is looking to reduce the corporate-income-tax rate over time to 25 per cent from 30 per cent at present and simplify provisions to improve compliance.
A comprehensive review of the country’s tax-incentives regime had been mandated under Timta to give an overview of the benefits as well as the costs of giving away fiscal perks to investors.
“The corporate-income-tax reform package is really the next one because we are just waiting for the Timta data. Once we have the data, we will analyse the cost and benefit of these incentives and then decide how we will proceed,” Chua said, adding that the next package will be based on data and evidence.
Under Timta, registered businesses are required to file a complete report on annual tax incentives to the Investment Promotion Agency, from which they get tax perks. The reports will be submitted by the IPA to the DOF as well as to the bureaux of Customs and of Internal Revenue.
To monitor and analyse the granting of tax incentives, the DOF was mandated to maintain a single database as well as submit to the Department of Budget and Management the following: actual amounts, estimates of claims, current year’s programmed amounts, and the following year’s projected amount of tax perks to be given away.
The National Economic and Development Authority, the state planning agency, meanwhile, must conduct cost-benefit analysis on the incentives to determine their impact on the Philippine economy.
