Cabinet team to study proposed shift to gross taxation

The head of the government’s economic team said on Friday that the top legal and economic minds of the administration would study the idea raised by President Duterte to shift the corporate taxation model to one based on firms’ gross revenues rather than the existing mode of basing it on net taxable income.

The President made this proposal in a speech on Thursday, saying the method would help eliminate corruption in the Bureau of Internal Revenue because it would remove the discretionary power of tax examiners and the negotiations between companies and these officials that usually followed after the initial assessment was made.

“There is a recommendation to form a group headed by the executive secretary, and participated in by the Department of Justice and the Development Budget Coordination Committee (DBCC) to study this issue,” Finance Secretary Carlos Dominguez III said in a message to reporters.

The DBCC is an economic policy-making group that is composed of the leaders of the Department of Finance, Department of Budget and Management and National Economic and Development Authority.

Any shift in the national tax scheme will need the approval of Congress.

Speaking in Bataan on Thursday, Mr. Duterte said the shift to the gross revenue-based taxation system—like in Hong Kong, Singapore, Brunei—would eliminate 70 percent of corruption.

Mr. Duterte also said changing the computation of corporate taxes would eliminate the need for examiners.