Euro Business groups welcomes tax reforms 2

March 01, 2018 News

THE European Union­ Philippines Business Network (EPBN) welcomes the second package of the Duterte administration'sComprehensiveTax Reform Program (CTRP), which aims to lower corporate income tax (CIT) rate and modernize fiscal incentives regime. "The European business community welcomes the tax reform initiated by the current administration in December2017. We saw the Tax Reform for Acceleration and Inclusion (TRAIN) Law which lowered personal income tax and provided several offsetting measures, "according to EPBN Advocacy Paper." As regards to the second tax package, we appreciate DOF's (Department of Finance) proposal to lower the corporate income tax from 30 percent to 25 percent, as well as the efforts to modernize incentives by making them performance­ based, targeted, time­bound, and transparent", the business group added. During the EPBN Tax Forum in Makati City Tuesday, EPBN Project Director and European Chamber of Commerce of the Philippines (ECCP) Executive Director Florian Gottein said the high CIT rate in the Philippines makes it challenging for investors to consider the country as investment destination when tax rates in other ASEAN statesare lower. In ASEAN, the Philippines has the highest CIT rate. "As long as tax rates remain among the highest in ASEAN, the Philippines will continue to risk losing out on more foreign direct investment (FDI) coming into the region and more worryingly, lose existing investors who relocate to more tax­ friendly cost efficient  jurisdictions," the EPBN document noted. Moreover, the business group has called on the government to simplify tax system and introduction of tax administration mechanisms inline with international best practices that will prevent tax evasions. On the other hand, the EPBN is seeking to keep the current tax perks regime. "We also call for the retention of current incentives regimes already in effect," Gottein said. "We suggest that, at the minimum, any additional reforms should be benchmarked against existing fiscal incentives granted to investors. Improving the Philippines' competitiveness should also be the core of any fiscal regime rationalization," he said. Finance (DOF) Undersecretary Karl Kendrick Chua said that under the proposed reform, the government would continue the existing income tax holiday but with no extension.