More ‘progressive’ corporate tax system sought
Even if the Philippines does succeed in reducing the corporate income tax (CIT), a system that taxes small and big businesses the same way will still be unfair to the underdogs, an exporters group said.
Thus the Philippine Exporters Confederation Inc. is again pushing for a progressive tax system that will, in essence, base the corporate income tax rate on a company’s ability to pay.Doing so means treating companies the same way the law treats people when it comes to personal income tax, wherein the rich and the poor pay different tax rates, depending on their taxable income.
This develops as the Duterte administration is pushing for a bill that will rationalize tax incentives and lower corporate income tax rates over 10 years, a slow process that Philexport said was not enough. The bill is still welcome news in a country that pays the highest corporate income tax in Southeast Asia, but lowering the CIT from 30 percent to 20 percent will still have small businesses pay at the same rate as multinational companies. In that case, Philexport said the Philippines would just be catching up to its neighbors, becoming the seventh country in the Association of Southeast Asian Nations (Asean) to adopt a gradual decrease in CIT.
Therefore, Philexport said that there should not be a gradual decrease, but rather a progressive implementation of the CIT, echoing the senate bill filed by Sen. Ralph Recto in July last year.“At the moment, the tax regime in the country has put Philippine companies in an uneven playing field with counterparts, especially in Asean,” said Oscar Barrera, trustee for the chemicals sector at Philexport.
A progressive implementation of the CIT “can be a game changer for the MSMEs (micro, small, and medium-sized enterprises) as it will give them more breathing space in terms of cash flow,” he added.
Senate Bill No. 595 will broaden the definition of corporate personhood, or the legal concept that corporations, like people, have rights, too.
Article continues after this advertisementRecto wants to extend this to apply in taxation too, and then impose a CIT of 5-25 percent.
