Task force formed to study gross-based taxation

MANILA, Philippines — The Department of Finance (DOF) has asked Malacañang to create a task force, which will conduct a study on the proposal to impose corporate taxes based on their gross earnings, according to top officials.

In an interview, Finance Secretary Carlos Dominguez said the government would prioritize the study on the feasibility and impact of the proposed shift to gross income-based taxation.

In line with this, Finance Undersecretary Antonette Tionko said the DOF has already written a letter to Malacanang seeking the creation of a task force which will study the proposal.

“We actually wrote a letter to the President to formally form a task force. We recommended already who are going to be members,” Tionko said.

“We have to study many things, specifically if it is in accordance with our constitution. Is it fair? Is it favorable to small businesses?” she said.

Along with the DOF, the proposed task force will be composed of the Office of the Executive Secretary, Department of Justice, Department of Budget and Management, and the National Economic and Development Authority.

In the meantime, the undersecretary clarified that the DOF would still push through with the remaining packages of the Comprehensive Tax Reform Program while it studies the proposal.

“Shifting to gross is just a study, it’s a long way to go,” Tionko said.

Dominguez said that it would not be part of the proposed tax packages under the CTRP.

Last month, President
Duterte said tax dues should be computed based on gross income and not on net income as this would remove 70 percent of the corruption within the Bureau of Internal Revenue (BIR).

He said this would eliminate the need for revenue examiners, who he claims are understating tax dues in exchange for grease money.

Gross income tax is assessed against the money one earns and is applicable to income from a job and to funds that are set aside in an estate or trust.

Net tax, on the other hand, is levied on production less subsidies received and is also paid to government less transfer payments, according to a Palace statement.

Meanwhile, the DOF is still pushing for the passage of four tax reform packages in the Congress.

These include Package 2, which aims to lower the corporate income tax (CIT) and modernize the fiscal incentives system; Package 3, which seeks reforms in the property valuation system; and Package 4, which rationalizes capital income taxation.