European businesses view the high corporate income tax rate in the Philippines as a “challenge” in convincing investors to consider the Philippines instead of its neighbors in Asia.
This was the message of Florian Gottein, executive director of the European Chamber of Commerce of the Philippines, at the Advocacy Forum on Tax Reform Package 2 at the Makati Shangri-La yesterday.
Gottein also said the ECCP favors a status quo on incentives.
Gottein pointed out that while the corporate income tax (CIT) was reduced to 30 percent in 2009, other countries in the region still have lower CIT rates.
Indonesia’s CIT rate has since decreased to 25 percent in 2008 while Thailand’s has decreased to 20 percent since 2012, making the Philippines’ corporate income tax the highest in the region.
Gottein said the second package of the Tax Reform for Acceleration and Inclusion “is of particular importance to the business community as it is expected to cover both corporate income tax and the rationalization of fiscal incentives.”
Gottein on the matter of rationalizing incentives to make it a competitive fiscal regime, “we also call for the retention of current incentives regime already in effect.”
“We suggest that, at the minimum, any additional reforms should be benchmarked against existing fiscal incentives granted to investors,” said Gottein, adding that improving the Philippines’ competitiveness should also be the core of any fiscal regime rationalization.
He said ECCP has long strived to create an attractive investment and trade environment for business in the Philippines.
“The European business community recognizes the importance of a more attractive Philippine investment environment and fiscal regime for foreign and domestic investors in order to maintain our competitiveness on both a regional and global level,” Gottein said.