Corporate income tax collection up 17%
Corporate income tax collection registered a double-digit growth in the first four months of the year, as the economy’s better-than-expected performance translated to favorable earnings for the business sector.
Data from the Bureau of Internal Revenue showed that income tax collected from corporate entities reached P132.52 billion in January to April, up by 17 percent from P113.42 billion in the same period last year.
The substantial increase in corporate income tax collection came as improving business and consumer sentiment in the Philippines helped drive investments and consumption. Increased economic activities were said to have led to higher revenues for providers of goods and services, thereby increasing their tax payments, too.
Corporations are slapped a 30-percent income tax rate in the Philippines.
A key contributor to government revenues, corporate income tax collection accounted for about one-third of the BIR’s total tax collection of P393 billion in the four-month period.
Economists said economic growth should naturally lead to an increase in income tax collection, especially if the tax collection system was efficient.
Finance officials said that, in the Philippines, there was still room for substantial growth.
They said leakages, mainly in the form of tax evasion, were suspected to remain significant. For this reason, the BIR said it was stepping up efforts to catch tax cheats.
Officials are also pushing for the lifting of various tax- and duty-free privileges granted to certain industries to further boost government revenues.
Revenue Commissioner Kim Henares earlier said her office and the Department of Finance would revive efforts to get a bill that would rationalize fiscal incentives passed.
Henares said the government was losing huge potential revenue from the granting of fiscal incentives to industries that were believed to remain profitable even without the tax perks.
She cited the income tax holiday enjoyed by developers of low-cost houses which, under the law, are defined as those costing P3 million or lower per unit.
Henares said a P3-million house should not be considered low-cost and that developers of these projects did not seem to need incentives.
She said the government would be better off extending direct housing subsidies to the poor rather than providing tax perks to property developers.
The BIR and the DOF said the government needed the additional revenues from the tax measure so that it could fund more development projects and programs.