By Chino S. Leyco
Finance Secretary Carlos G. Dominguez III welcomed the filing in the House of Representatives of the second tax reform measure that aims to institute enhancements in the country’s corporate tax system.
In a statement, Dominguez also expressed his hope that the legislature can begin hearing the measure as soon as the Congress resumes its regular session in May following its traditional Lenten break.
Dominguez said the swift approval of House Bill (HB) No. 7458, which provides for graduated cuts in the corporate income tax (CIT) rate and the modernization of investment incentives, would level the playing field for business.
The bill will also make corporate income taxation transparent, more accountable and more equitable for both large and small corporations, the finance chief said.
“With the timely filing of the measure in the House, we are optimistic that this proposal, along with the remaining tax reform packages, would be approved by the Congress within the year,” Dominguez said.
Corporate tax reform comprises Package 2 of the Duterte administration’s Comprehensive Tax Reform Program (CTRP). The DOF is targeting to introduce this year the rest of the CTRP packages that mainly cover property and capital income taxation.
HB 7458 was filed last March 20 and is expected to be referred to the appropriate committee that will deliberate on the measure when the Congress resumes session on May 14.
Finance Undersecretary Karl Kendrick T. Chua said 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 next year.
However, Chua said the bill also stated that the reduction should not reach lower than 20 percent.
HB5478, once passed into law, will also modernize the present fiscal incentives regime, making it performance-based, targeted, time bound, and transparent.
Similar to the version proposed by the Department of Finance (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 deserving industries are given incentives.
“HB 7458 also aims to either amend or repeal tax incentive provisions and processes contained in 114 special laws,” Chua said. “The long list of incentives managed by investment promotion agencies have “caused confusion among investors availing themselves of these tax perks.”