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TRABAHO BILL: Inputs by Mon Abrea on Corporate Income Tax

Will the proposed TRAIN 2 Package be bane or boon in the Philippine economy? Find out below

TRABAHO Bill and SB 1906: Inputs by Mon Abrea

CORPORATE INCOME TAX

TRABAHO Bill and SB 1906: Inputs by Mon Abrea on CORPORATE INCOME TAX. #MSInfoGFX
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

House Bill No. 8083’s proposal to lower the CIT is too slow. Currently, the second highest CIT rates are Myanmar’s and Indonesia’s 25%. Going with the rate proposed by HB No. 8083, it would not be until 2025 that the country will have competitive tax rates at 24%. SB No. 1906’s proposal to lower the CIT immediately to 25% is a better alternative.

Unfortunately, a 25% CIT means the Philippines will be moving from having the “highest” tax rate to having “one of the highest” tax rates along with Myanmar and Indonesia.

In addition to the immediate lowering to 25%, the tax reform needs to gradually reduce the corporate income tax further to 20%.

Lower tax rates would not mean lower tax revenues, as proven by Vietnam, Malaysia, and Thailand. Lower tax rates could be counterbalanced by improvements in the collection performance of the Bureau of Internal Revenue (BIR).

In 2015, the BIR missed its collection targets by 13.88%. In 2016 and 2017, the BIR also barely missed its collection targets as well – by 2.73% and 2.65% respectively. This is despite increases in collection growth rates.

As such, further lowering the CIT to 20% can be done provided there is a certain percentage of improvement in the revenue collection agency’s performance by broadening taxpayer base and increasing voluntary compliance.

Catch the next topic on the series tomorrow!

Topics: House Bill No. 8083 , CIT , Trabaho Bill , Train law 2 , mon abrea
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