DOF submits ‘Package 2’ of tax reform to Congress

The Department of Finance has submitted to Congress the second package of the comprehensive tax reform program (CTRP), seeking to reduce corporate income tax (CIT) rates and modernize fiscal incentives.

CTRP-2 was submitted on Monday, January 15, when Congress resumed its regular session after the year-end recess.

“The CTRP’s Package 2, which the DOF designed to be revenue-neutral, proposes to gradually lower the CIT rate from 30 to 25 percent while modernizing incentives for companies to make these ‘performance-based, targeted, time-bound, and transparent’,” the DOF said Tuesday.

The second package seeks to ensure that incentives granted to businesses generate employment, stimulate the economy, and contain provisions that limit tax perks, Finance Undersecretary Karl Kendrick Chua noted.

The CTRP aims to plug leakages such as tax holidays and other perks with no time limits which cost the government over P300 billion a year in foregone revenues.

President Rodrigo Duterte signed the first package—reducing the personal income tax and expanding the value-added tax (VAT) base—into law on Dec. 19, 2017.

The DOF earlier planned to submit the second package in October, but it was pushed back as the government was focused on the first package.

The DOF said it plans to submit up to five tax reform packages which seek to overhaul the Philippine tax system. —Jon Viktor Cabuenas/VDS, GMA News