Foreign companies doing business in the country said bringing down the corporate income tax (CIT) for large enterprises from 25 percent to 20 would not hurt the domestic economy, but will encourage more investors to locate in the country.
This was the raised during a virtual press conference at the closing of the 10Th Arangkada Philippines Forum, an annual event organized by the Joint Foreign Chambers, where foreign businessmen called for the amendment of the relatively new CREATE Law, which lowers the CIT from 30 percent previously to 25 percent. Under the CREATE Law, the micro, small and medium enterprises are the biggest beneficiaries through the grant of the largest ever corporate income tax rate reduction in the country, from 30 percent to 20 percent. Large corporations also enjoy an immediate reduction in the corporate income tax rate from 30 to 25 percent.
Julian H. Payne, president of the Canadian Chamber of Commerce in Philippines, noted that at 25 percent CIT for large enterprises, the Philippines still remains the highest CIT in ASEAN where the average is 20 percent.
Payne even noted that the government’s economic managers in their recent presentations painted a good financial standing of the country. He expressed doubt that bringing down the CIT to 20 percent for big business will not do harm to the economy. On the contrary, he stressed, the lower CIT will create more investments and broaden the tax base. Payne went on to express hope that the next administration will consider and bring the CIT to 20 percent at least by one percent cut annually.
Lars Wittig, president of the European Chamber of Commerce of the Philippines, cited how resilient the Philippine economy has been. He noted of the impact of the COVID and yet the economy has remained in good stead. Wittig, who is also country manager of Regus & Spaces by IWG, believes that a 20 percent CIT could not hurt a domestic economy whose budget deficit accounts for 9 percent of GDP.
Ebb Hinchliffe, executive director of the American Chamber of Commerce of the Philippines, noted that they would continue to lobby for 20 percent CIT to be at par with ASEAN and be competitive with the region.
But John Forbes, senior adviser of the American Chamber of Commerce of the Philippines, discounted the likelihood of the Department of Finance agreeing to a reduction of the CIT this soon as there are other priorities the government has to pursue. Besides, he pointed out the government was only able to rationalize the tax incentive regime 20 years.
He, however, called for constant dialogue with the government and promote for the passage of other economic reform measures like the further relaxation of the Retail Trade Liberalization Act, Public Services Act, and Foreign Investments Act.