MANILA - The European business lobby on Wednesday again cautioned against removing fiscal incentives for companies currently enjoying them and said the government's proposed new corporate income tax rate still falls short when compared to those in other countries.
The government is looking to "modernize" fiscal incentives and lower corporate tax rates to 25 percent from 30 percent in the second package of tax reforms submitted to Congress.
Under the proposal, existing tax incentives would be removed after a maximum of 5 years.
But the head of the European Chamber of Commerce in the Philippines (ECCP), Guenter Taus, said the removal of incentives would "send the wrong signal" to existing companies and prospective investors.
Taus told ANC's Market Edge that the proposed 25 percent corporate income tax rate would not make up for the lost incentives.
"Twenty five percent is neither here nor there in the context of ASEAN because even if we cut it down to 25 percent, it is still the highest together with Indonesia," Taus said.
A corporate income tax rate of 20 percent would be preferable, he said.
Among the incentives that will be removed after 5 years is the 5 percent gross income earned tax which will be replaced by a preferential corporate income tax rate of 15 percent based on net income.
Taus batted for a longer period for keeping the incentives.
"Fifteen years would be competitive," he said.