Gov’t wants to reduce corporate taxes across the board to 25% starting July

The Duterte administration’s economic team is proposing a modified version of the still pending Corporate Income Tax and Incentives Rationalization Act (CITIRA) bill, aiming to reduce corporate income tax immediately to help businesses recover from the onslaught of the COVID-19 pandemic.

In a press conference during the Sulong Pilipinas 2020 virtual summit on Thursday, Socioeconomic Planning Acting Secretary Karl Kendrick Chua said the economic team is preparing three bills as part of the recovery stage from the COVID-19 crisis starting June until December 2020.

Among the three “instruments” is the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) bill —a modified version of the CITIRA bill.

“Senate has CITIRA already, so they can just revise that so as not to start from zero,” Chua said in a separate text message.

CITIRA was approved in the House of Representatives in September 2019 as House Bill No. 4157. The Senate version, Senate Bill No. 1357 and certified as urgent by President Duterte, is undergoing interpellations.

In light of the COVID-19 pandemic, the economic team is seeking to revise the bill to make it fit for the current situation.

To recall, Finance Secretary Carlos Dominguez III called for the passage of the CITIRA bill before June 3. The current version aims to lower the corporate income tax from 30% to 20% over a period of 10 years.

To recall, Finance Secretary Carlos Dominguez III called for the passage of the CITIRA bill before June 3. The current version aims to lower the corporate income tax from 30% to 20% over a period of 10 years.

Chua, however, said the DOF is now proposing to reduce corporate income tax "across the board," meaning for all businesses, immediately starting July.

“So currently from the 30% corporate income tax, we will reduce it to 25% immediately to help small businesses, in particular,” the Socioeconomic Planning acting chief said.

Under the CITIRA bill, fiscal incentives will be rationalized to make these “performance-based, time-bound, targeted, and transparent.”

The bill intends to prioritize incentives to business activities that generate domestic employment; promote research, development and innovation; promote agribusiness; and invest in areas that are less developed or are recovering from disasters and conflicts, among others.

It will also offer additional tax deductions to reward corporations’ good behavior, such as local job creation, exports, and investment in high technology.

Under the CREATE, Chua said there will be no changes in the current fiscal incentives being enjoyed by existing investors for the next four to nine years “so that they can adjust sa COVID-19.”

“For new investors, we will actively seek them out and ask them what they would need as incentives to contribute to job creation in the Philippines,” Chua said, noting that incentives will still be targeted, time-bound, and tailor-fitted to proactively attract the right types of investments.

“In the countryside, we will have targeted incentives so that we can support the Balik Probinsya, Bagong Pag-asa program,” he said.

The Cabinet official noted that tax incentives will have an improved management and governance through the Fiscal Incentives Review Board (FIRB).

“So that when we do grant tax incentives from the hard-earned taxes that your parents pay and that you will pay in the future, it will be performance-based, time-bound, and transparent,” Chua said. — BM, GMA News