360 laws provide tax breaks to PH corporates — DOF
This is just too much.
The Department of Finance (DOF) is lamenting the country’s poor collection rate from corporate taxes, as it pinned the blame to the outrageously many tax breaks and fiscal perks extended to businesses operating in the Philippines.
Despite the 30% income tax rate for corporates, its contribution to the economy only reaches a mere 12 percent, versus a 30 percent annual average in other Southeast Asian countries despite their lower 25 percent tax rate.
The main culprit is some 360 laws granting a wide berth of tax perks to businesses, Finance Undersecretary Karl Kendrick Chua said.
“So clearly, we have the classic problem of a high rate but narrow base. That is why the efficiency is problematic,” Chua said in a statement.
This problem is seen cured under package two of the tax reform program, where the Finance department wants to cut the corporate income tax to 25 percent — matching the regional standard — to be offset by the “rationalization” of tax perks.
In essence, the government will be clipping the fiscal incentives given to companies and gain from them through tax collections.
“Through this proposal, the government would be able to ensure that incentives granted to businesses generate jobs, stimulate the economy in the countryside and promote research and development; contain sunset provisions so that tax perks do not last forever; and are reported so the government can determine the magnitude of their costs and benefits to the economy,” the DOF said.
The proposal will be referred to Congress this January.