House panel approves TRAIN 2 substitute bill

MANILA, Philippines —The House of Representatives’ Ways and Means Committee on Tuesday approved a substitute bill of the Duterte administration’s proposed corporate tax reform program.

Corporate tax reform comprises Package 2 of the Duterte administration’s Comprehensive Tax Reform Program. The proposal is also known as TRAIN 2, after the name of the Tax Reform for Acceleration and Inclusion law.

The measure aims to trim corporate income tax and streamline fiscal incentives to grant them only to those who need them

The House panel-approved substitute bill seeks to gradually slash the current 30-percent corporate income tax by 2 percent every other year starting 2021 to 2029, provided that the cut would not reach lower than 20 percent, according to a tweet report by BusinessWorld.

Incentives will now be a 15% preferential rate on net income, from the 5% tax on gross income in lieu of all other national and local taxes, with a sunset period of 2-5 years. @bworldph

— Elijah Tubayan (@elijahtubayan) August 7, 2018

The committee also proposed renaming Package 2 of the tax reform program to “Tax Reform for Attracting Better and High-Quality Opportunities (TRABAHO).” The measure was previously known as Corporate Income Tax and Incentives Reform Act (CITIRA).

“Generating better opportunities for Filipinos has always been our primary objective in this exercise. We are moving to an incentives regime that is biased to development outside of metro or urban areas,” Rep. Dakila Carlo Cua (Quirino), Committee on Ways and Means chairman, said in a statement.

“We are also lowering the burden on businesses so that they can expand and provide more employment opportunities,” Cua added.

Despite President Rodrigo Duterte’s public popularity and the super-majority he holds in Congress, Senate Majority Leader Juan Miguel Zubiri earlier said Package 2 has “very little support” from senators amid fears that the measure could slow investments and fan inflation.

The Department of Finance is targeting to introduce in July this year the rest of the tax reform packages that mainly cover property and capital income taxation. 

Since the start of 2018, the DOF has submitted Package 2, as well as the reforms on taxes on alcohol and mining, while supporting the bill of Sen. Manny Pacquiao on tobacco excise taxes. — with a report from BusinessWorld