DOF defends proposed corporate tax reform: Gov't must be fair
MANILA, Philippines — Finance Secretary Carlos Dominguez on Tuesday defended anew the government’s proposed corporate tax reform, saying the Duterte administration is working on making a fair system for companies.
Corporate tax reform comprises Package 2 of the Duterte administration’s Comprehensive Tax Reform Program.
Filed as House bill 8083, or the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO), it seeks to cut the corporate income tax (CIT) rate to 20 percent gradually from the current 30 percent and remove redundant tax incentives.
“I expect some resistance; I also expect a lot of people supporting this. Because actually, the smaller firms are going to absolutely benefit from the reduction in taxes. There are those that obviously don’t like it but I think the vast majority will actually be benefitting [from it],” Dominguez said at a forum organized by the Economic Journalists Association of the Philippines.
“These are privileges given. It’s a tax privilege. The nature of a privilege is that it can be [taken away]. It’s not a right,” he added.
“So if you violate the rules or if it becomes burdensome to the economy, if it becomes unfair to the rest of the companies, then I think it is necessary for the administration to correct that problem. If you don’t correct the problem, you are actually perpetuating an unfair system. Wouldn’t you want your government to be fair?”
According to Department of Trade and Industry estimates, micro, small and medium enterprises account for 25 percent of the country’s total revenue from exports with 60 percent of exporters belonging to the MSME category.
The version of TRABAHO bill that was approved by a House panel did not incorporate the Department of Finance’s proposal to make the CIT cuts conditional on revenues from removal of select tax perks. This means foregone revenues in the first year of implementation in 2021 that will not be matched by an offsetting provision.
Despite President Rodrigo Duterte’s public popularity and the super-majority he holds in Congress, Senate majority leader Juan Miguel Zubiri earlier said the proposed corporate tax reform has “very little support” from senators.
The DOF is targeting to introduce this year the rest of the tax reform packages that mainly cover property and capital income taxation. — with reports from BusinessWorld
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