Package 2 : TRABAHO

Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) or Package 2 of the Comprehensive Tax Reform Program seeks to lower the corporate income tax (CIT) rate gradually from 30% to 20%, reorient fiscal incentives toward the strategic growth industries of tomorrow, and make incentives available to investors who make net positive contributions to society.

Legislative status

  • House of Representatives: Approved on third and final reading (10 Sept 2018)
  • Senate: First committee hearing conducted (Jan 2018)

Provisions of TRABAHO

The Philippines has the highest CIT rate among ASEAN countries, making it difficult for the majority of Filipino businesses to become competitive. Some 90,000 corporate taxpayers in the Philippines are small and medium enterprises (SMEs) and most of them pay the regular CIT rate of 30%. More than 10,000 micro enterprises also pay this rate.

Having the highest corporate tax rate in the ASEAN region puts the Philippines at a disadvantage against our neighbors with regard to domestic and foreign investment. By lowering the rate, we will improve the competitiveness of all businesses, especially MSMEs, and encourage robust business activity, investment, and tax compliance.

Comparative CIIT rates in ASEAN
Begin to sunset tax exemptions and discounts for corporations enjoying incentives

For corporations that qualify for incentives, support corporations that qualify for incentives through:


Today, some incentives are given forever and recipients are not required to meet performance targets that benefit society. The granting of incentives should result in good things that would not have happened otherwise: additional job creation; countryside development; innovation; research and development. It is the same principle when one is granted a scholarship for college. The scholarship is not given forever and for free. Instead, you must meet grade requirements and you have to graduate within a reasonable period of time.


We cannot give incentives to an unlimited number of groups or industries. We must identify sectors that are aligned with our national development priorities. Remember that if we give one group an incentive, we are asking another group to pay more. Under today’s unfair system, granting overly generous incentives to a select few requires that the majority of taxpayers pay a much higher rate, at 30 percent. Tax incentives should be given to activities that result in significant benefits to the country as specified in a Strategic Investments Priority Plan (SIPP).


The granting of tax incentives should include sunset provisions. For instance, the government should help infant industries while they are struggling to become competitive and world-class. After a reasonable amount of time, it is only fair to expect the same industry to contribute back to the country. The absence of a time limit on incentives is detrimental to accountability and performance.


Each peso given as an incentive to a company is a peso not invested in public health, education, social protection, or infrastructure. Therefore, regular monitoring and evaluation of tax incentives should be institutionalized to ensure that what society gains outweighs the cost of incentives. Recipients and the amount of incentives received should be reported to the government and the public.

Benefits of the Reform

CIT reduced from present 30% to 28% in 2021 all the way to 20% by 2029. This will benefit and strengthen 98% of all corporations, mostly SMEs


  • For corporations registered for incentives, provide additional tax deductions for
    • Labor cost
    • Training cost
    • Purchases from local suppliers
    • Infrastructure development
    • Research and development
    • Accelerated depreciation allowance
  • Encourage registered corporations to
    • generate more and better jobs
    • be more efficient and competitive
    • locate in the countryside
    • introduce innovation
    • Invest in agribusinesses