The Department of Finance (DOF) has given up on its wish for Congress to pass before year-end the second tax reform package aimed at slashing the corporate income tax rate while rationalizing the fiscal perks that investors are enjoying.
Finance Secretary Carlos G. Dominguez III told reporters Monday he hoped that lawmakers would make use of the remaining time before the elections to pass the Tax Reform for Attracting Better and High-quality Opportunities (Trabaho) Act.
“It’s the last session week and they still have to look at martial law [extension in Mindanao], they haven’t finished the [proposed 2019 national] budget. We have to try again next year, I guess,” Dominguez said. He noted of the “risk,” however, given that “it’s near the elections.”
While the Lower House already passed the Trabaho bill in September, senators were lukewarm and warned of the effects of the bill especially on job creation.
Dominguez promised the second tax package would create 1.4 million jobs in the next 10 years for small-and-medium enterprises (SMEs), which are at a disadvantage compared to bigger companies protected by tax incentives.
The Trabaho bill will also gradually cut to 20 percent the corporate income tax rate, which at 30 percent currently is the highest in the Asean region.
“If you examine the proposal more closely, you will see that the new incentive regime being pushed by the Duterte administration is even more attractive for those who wish to do the country good while doing well,” Dominguez said.
He clarified the perks were not being scrapped.
“[We just want the] incentives to be performance-based, time-bound, specifically targeted and fully transparent. We want the incentives to foster better forward and backward linkages with the domestic economy, increase hiring of local workers and cause more transfers of technology,” the Finance chief earlier said.