By CHINO S. LEYCO
The Department of Finance (DOF) is amenable to the proposal to drastically reduce the country’s corporate income tax rate (CIT) by July this year to stimulate businesses amid economic crisis and financial distress.
Citing recommendations from the DOF, Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said yesterday they will support the proposed big time five percent CIT reduction from 30 percent to 25 percent.
Chua said the DOF is open to lower the country’s CIT, the highest in Southeast Asia, by July this year subject to approval by Congress.
On Wednesday, House Economic Stimulus Cluster co-chair, Albay 2nd District Rep. Joey Sarte Salceda called on the executive to lower the CIT to attract investors and counter the crippling effects of the pandemic on the economy.
Aside from corporate income taxation, Chua said the DOF also supports the retention of tax incentives currently being enjoyed by registered enterprises for the next four years to nine years.
However, he said tax incentives for new investors should be targeted, time bound and tailor-fitted to proactively attract right types of investment.
Earlier, Finance Secretary Carlos G. Dominguez III said he was open to tweaking their proposed Corporate Income Tax and Incentives Reform Act (CITIRA) now pending in the Senate.
Aside from the tax cut, CITIRA also seeks to rationalize fiscal incentives currently being enjoyed by select firms, particularly the 5 percent tax on gross income earned.
Dominguez was also open to giving the Fiscal Incentives Review Board (FIRB) “the flexibility of tailoring programs to the needs of individual companies,” calling it an “idea worth exploring.”
FIRB is an existing inter-agency committee led by the Department of Finance, which currently grants tax subsidies to government-owned or -controlled corporations.
Senate and House versions of CITIRA aim to expand the board’s functions by mandating a committee to approve all incentives, including those given to private companies, as recommended by the different investment promotion agencies.
CITIRA is the second package of the Duterte administration’s Comprehensive Tax Reform Program (CTRP). The measure was among the priority bills endorsed by President Rodrigo Duterte during his fourth State of the Nation Address in July.