House OKs on 2nd reading bill lowering corporate tax, fixing incentives
MANILA, Philippines — The House of Representatives on Monday night approved on second reading a bill seeking to reduce the corporate income tax (CIT) rate and rationalize incentives for businesses.
Voting viva voce, the House approved substitute House Bill No. 4157, which amended the original Corporate Income Tax and Incentive Rationalization Act (CITIRA) bill that the House ways and means committee passed on Aug. 15.
The proposed measure, which is the second package of the Duterte administration’s Comprehensive Tax Reform Program (CTRP), aims to lower reduce the corporate income tax rate from 30% to 20% in 2029. The CIT will be reduced by 1% per year until 2029.
“This is the single biggest structural reform still available to us in order to establish our competitiveness and ensure a level-playing field inside our businesses,” Rep. Joey Salceda, House appropriations committee chairman, said. “It will have enormous impacts on consumers by way of higher competition domestically, and ensure that their incumbent players will behave competitively in the fear of inviting new players into the industry.”
Last Sept. 1, Salceda said passing the bill would bring additional revenues to the government’s “responsible corporate partners” every year and entice domestic companies to “produce here rather than abroad.”
He also said the bill could add a 3.9% of gross domestic product (GDP) growth rate per year, while inflation will be tamed to only 0.9%.
Among the amendments in the substituted bill are the incentives formula for investors, particularly income tax holidays and reduced CIT.
“We improved the offer of Congress to investors,” Salceda said.
He said the formula for enterprise areas adjacent to Metro Manila incentives would include four years of income tax holiday and three years of reduced CIT.
Meanwhile, businesses beyond adjacent areas would be given a tax holiday of six years and four years of reduced CIT.
The amended bill would also strengthen the powers of the Fiscal Incentive Review Board (FIRB) in granting incentives, particularly on the investment promotion agencies (IPAs).
Aambis-Owa party-list Rep. Sharon Garin, vice chairperson of the ways and means committee and co-sponsor of the bill, urged for the urgent passage of the CITIRA bill.
“This representation has high hopes that CITIRA law will make the Philippines more competitive not only in ASEAN countries but also globally,” Garin said in her sponsorship speech.
“I also foresee stronger domestic investments from small and medium enterprises as well as foreign direct investment by leveling the playing field with rationalized fiscal incentives to the old and new player from all sectors… In this regard, I urge for the immediate passage and approval of this bill,” she added.
/atm
