MANILA - Lawmakers on Monday approved on second reading a lower House bill that seeks to reduce corporate income taxes and limit fiscal incentives.
House Bill 4157 or the Corporate Income Tax and Incentives Rationalization Act (CITIRA) aims to cut the corporate income tax rate to 20 percent from 30 percent over a 10-year period.
It also limits fiscal incentives granted to select firms by removing the option for corporations, including resident foreign corporations, to avail of the 15 percent gross income tax.
In place of the current regime of tax perks, CITIRA says incentives may only be given to exporters and industries listed in the Strategic Investments Priority Plan (SIPP).
It also allows the President to grant incentives if a project has a comprehensive sustainable development plan and will bring in at least $200 Million.
Incentives will also be given for a maximum of five years, removing perpetual 5 percent on gross income earned and limiting income tax holidays, unless approved by the Board of Investments.
Officials of the Department of the Trade and Industry and the National Economic and Development Authority will also be included in the Boards of investment promotion agencies (IPA) with the Secretary of Finance as the co-chair of all IPA boards.
The Department of Finance has pushed for the lowering of corporate income tax rates to bring the country's level at par with its Asian neighbors.
The DOF also lobbied for "rationalizing" fiscal incentives, saying the government was losing revenues to tax perks. In 2017 alone, the government gave away P441 billion in tax incentives to 3,139 firms, the DOF has said.
Exporters and business process outsourcing groups meanwhile warned that removing incentives may lead to job losses as investors shift their operations to other countries.
- Report from RG Cruz, ABS-CBN News