Group presses tax perks for small firms
The Philippine Exporters Confederation Inc. (Philexport) wants the government to offer incentives under the second tax reform package specifically designed for micro, small and medium-sized enterprises (MSMEs).
Philexport said that it wanted to see some fiscal and non-tax incentives in the second tax reform package, which the Department of Finance has recently submitted to Congress.
After passing the first package—also known as the TRAIN law—in December last year, the government is now pushing the second in a series of tax reform packages.
While the TRAIN law lowered the personal income taxes of many Filipinos and raised consumption taxes, the second package seeks to cut corporate income tax and rationalize tax incentives.
Some of the incentives that Philexport wanted included tax deductions for research and training of registered export firms located outside economic and freeport zones, value-added tax (VAT) exemption on customs duty for imported export inputs, and exemption from wharfage and export tax.
“This will level the playing field in providing same footing of competitiveness for our (small- and medium-size) exporters regardless of their location. Likewise, this is part of the effort to reduce the cost of doing business,” it said.
The group added that there should also be nontax incentives such as simplification, reduction and harmonization of procedures and time-bound processing of export documents.
Packaging materials, moulds, tools and utilities used for export production should be also included in the list of raw materials exempt from VAT, Philexport said.
According to DOF presentations given to industry groups, the second tax package would rationalize investment tax incentives by providing a single menu of incentives across all investment promotion agencies like Peza.
Eventually, the government intends to reduce the corporate income tax rate from 30 percent to 25 percent by 2022.
This, however, is only under the condition that the corporate income tax would drop by one percentage point for every reduction in investment tax perks equivalent to 0.15 percent of gross domestic product (GDP) in 2018 or an estimated P26 billion.
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