The European business community is willing to see the current set of fiscal incentives rationalized on the condition that the lowered corporate income tax (CIT) rate of 25 percent be removed at the start of the implementation of the second tax reform package.
European Chamber of Commerce of the Philippines (ECCP) president Guenter Taus said the lowered CIT of 25 percent, if given at the onset of TRAIN 2 and not subjected to any conditions as proposed at present, could appease businessmen should the current set of incentives be removed.
Under House Bill (HB) 7214,or the Corporate Income Tax and Incentives Reform Act, the lowering of the CIT is dependent on the reduction of the
cost of gross domestic product in granting tax incentives to business investments.
"Ideally, we advocate for the retention of the incentives currently enjoyed by companies registered under investment promotion agencies like the BOI and PEZA.
However, if not possible at this point, we are advocating for the lowering of the CIT at the onset of the Package 2 implementation, and for it
not to be subject to any condition, at the minimum," Taus told The STAR.
Taus said it is better if the incentives regime already in place in various sectors and industries are maintained, while any additional reforms be benchmarked against existing fiscal incentives granted to investors as the minimum.
"The European business community in the Philippines remains confident the Philippine government will continue to work closely with the private sector to improve doing business in the Philippines for both Filipino and European businesses alike," Taus said.
The second tax reform package of the government seeks to cover both rationalization of fiscal incentives and reduction of CIT rates.
The CIT in the Philippines of 30 percent is reportedly the highest among large ASEAN economies, with Indonesia's 25 percent being the second highest.
According to the American Chamber of Commerce of the Philippines, the country's 30 percent rate deters some investment by both domestic and foreign firms.
Internationally, the group said the trend is for governments to reduce their CIT.
This article was originally published on June 11, 2018 on The Philippine Star (print)
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