Metro Manila (CNN Philippines, September 3) — The House of Representatives has approved the second tax reform package targeting corporate income taxes and fiscal perks.
The measure, formally called the Corporate Income Tax and Incentives Reform (CITIRA) bill, secured second reading approval from the chamber.
The CITIRA bill, the second package after the Tax Reform Acceleration and Inclusion (TRAIN) law, will trim the corporate income tax rate from 30 percent to 20 percent over 10 years, while reducing tax breaks for investors. This is expected to make the Philippines a more viable investment destination, as the country currently imposes one of the highest tax rates in Asia.
Based on the report prepared by the House Committee on Ways and Means that merged 10 bills into one version, the corporate income tax rate will be slashed by 2 percent every other year starting in 2021. By 2029, the rate will be at 20 percent.
The bill would also create a uniform tax incentives package for all kinds of investments and would set a limit as to how long businesses can enjoy tax discounts.
Salceda had been pushing for a maximum of 10 years for incentives, which is longer than the seven-year cap sought by the Department of Finance (DOF). Under the bill, locators based in Metro Manila will be entitled up to five years’ worth of tax perks, those in adjacent provinces, seven years; and businesses who set up shop in the regions, up to 10 years.
Incentives currently enjoyed by businesses located within ecozones and special industries include income tax holidays and discounted tax rates which do not expire, the DOF has said. The country gave away over ₱1.12 trillion in tax exemptions from 2015 to 2017 alone, which was enjoyed by 3,150 companies, DOF data show.
The CITIRA bill still needs to be approved on third reading in the House before it can be taken up by the Senate for their own discussions.
