The Department of Finance (DOF) has thanked the House of Representatives for approving on third and final reading the bill seeking to lower the corporate income tax (CIT) and correct the convoluted incentives system for businesses, as it expressed optimism that the Senate would pass a similar measure soon enough to enable the people to reap the benefits of a fair, transparent and accountable tax system in the form of more investments and jobs.
Finance Secretary Carlos Dominguez III said the proposed reforms in corporate taxation would not only help sustain the economy’s high growth trajectory but would also benefit around 90,000 small and medium enterprises (SMEs) that provide a large number of jobs for the country’s workforce.
“We are thankful that the House under the leadership of Speaker Gloria Macapagal Arroyo has heeded the call of President Duterte in his 3rd State-of-the-Nation Address (SONA) to swiftly pass the CIT reform bill, which comprises Package 2 of his comprehensive tax reform program (CTRP),” Dominguez said. “This measure, as the Speaker had correctly stated, ‘will bring us to the next level of development.”
Quirino Rep. Dakila Carlo Cua, who held several hearings on the bill when he was then-chairman of the House ways and means committee, was the measure’s principal author and had sponsored its approval before the House plenary.
The House approved last Sept. 10 its version of the CIT reform bill known as the Tax Reform for Attracting Better and Higher Quality Opportunities (TRABAHO) Act. Under the leadership of Arroyo, who had strongly supported the TRABAHO bill, it took just took 34 working days after President Duterte’s appeal to the Congress to have the measure passed.
A total of 187 lawmakers had voted for the TRABAHO bill on third and final reading.
Dominguez urged the Senate “to likewise heed the President’s call for an equitable tax system by giving its stamp of approval to Package 2,” which remains pending in the chamber’s ways and means committee.
In his SONA last July 23, President Duterte said that Package 2 “will lower corporate income taxes, especially for our small businesses,” which, in turn, “mean they will have more money to invest and create more jobs.”
The President urged the Congress to pass Package 2 before the end of the year.
More than 99 percent of businesses are the micro, small and medium enterprises (MSMEs) that employ around 65 percent of the country’s workers.
“The enactment of Package 2 is what stands between today and millions of jobs in the near future,” the President said in his SONA.
Dominguez said correcting the flaws in the fiscal incentives system, which currently favor only a select set of enterprises that can well afford to do away with such perks, would level the playing field for all businesses, especially the SMEs, and attract new players to compete under this fair and equitable environment.
This pro-investment tax reform package, Dominguez said, will ensure that fiscal incentives remain so long as these are performance-based, which means firms must commit to meeting targets such as job creation, export sales, countryside growth, and research and development, among other goals.
Incentives should also be time-bound, which means tax perks are not granted indefinitely; targeted so that only industries that provide multiplier benefits to the economy will be given incentives; and transparent to ensure recipients report the incentives they get to the government and the public.
According to Finance Assistant Secretary Antonio Joselito Lambino II, the bill is “pro-incentive for the right reasons.”
He said in a forum that the TRABAHO will spur economic activity outside Mega Manila, create more jobs and encourage investments in new industries, research, and technologies.
More on TaxReform News
DOF thanks Congress for ratifying TRAIN →Date Posted: December 14, 2017
Finance Secretary Carlos Dominguez III has thanked the Congress for ratifying the Tax Reform for … Continue reading DOF thanks Congress for ratifying TRAIN
Steps to develop human capital, attract FDIs top proposals in 2019’s 1st Sulong Pilipinas →Date Posted: July 7, 2019
Initiatives to sharpen the competitiveness of the country’s future workforce, improve the delivery of social … Continue reading Steps to develop human capital, attract FDIs top proposals in 2019’s 1st Sulong Pilipinas
First 250K income of compensation earners exempted from tax under TRAIN →Date Posted: August 7, 2017
The first P250,000 in taxable income of compensation earners will be exempted from the personal … Continue reading First 250K income of compensation earners exempted from tax under TRAIN
Over 1,000 entrepreneurs take part in ‘Sulong’ regional forumsDate Posted: April 29, 2019
More than 1,000 entrepreneurs, mostly representing small and medium enterprises (SMEs), were consulted by the … Continue reading Over 1,000 entrepreneurs take part in ‘Sulong’ regional forums