UPDATES ON THE TAX REFORM PROPOSAL PACKAGE 2
- UPDATES ON THE TAX REFORM PROPOSALS PACKAGE 2
- TAX & BUSINESS-RELATED NEWS [SEPTEMBER 3-6]
I. UPDATES ON THE TAX REFORM PROPOSALS PACKAGE 2
On August 14, 2019, the House Committee on Ways and Means approved the Corporate Income Tax and Incentive Rationalization Act (CITIRA) bill to boost government efforts to improve the country’s investment climate. The CITIRA bill was principally authored by Congressman Joey Salceda which aims to encourage investments by bringing down the corporate income tax rate, ensure the fairness and transparency of fiscal incentives, and enhance the accountability of taxpayers through refinement of tax administration.
Highlights of this bill include:
On Corporate Income Tax (CIT)
- Seeks to reduce the current 30% CIT by 2% every two years
- Pursues to exempt Home Development Mutual Fund from income taxation
- Removal of resident foreign corporations capacity to avail the 15% gross income tax
- Corporate taxpayers who enjoy preferential rate to be subject to CIT or adjusted CIT
- Provides a schedule of amount of interest paid which may be allowed as deduction from gross income.
On Fiscal Incentives granted to industries under BOI or PEZA
- Limits the grant of fiscal incentives only to registered activities listed in the Strategic Investments Priority Plan (SIPP)
- Grant of authority to the President to give incentives which shall not exceed five (5) years for projects which will bring at least US$200 Million
- Removal of 5% Gross Income Tax (GIT)
- Reduction of CIT to 18% and further reduced by 1% point every other year up to 13%
- Grants reapplication for investors and locators after five (5) year or seven (7) year-period to apply for another five (5)-year incentive
On Tax Administration
- Grants the BIR Commissioner power to issue subpoena duces tecum
- Grants the BIR authority to disregard tax avoidance arrangement in transfer pricing schemes
- Stops the issuance of Tax Credit Certificates (TCC). Taxpayer may claim overpayments or refundable transactions only through a refund.
- Digitization of receipts, invoices, public certificate system of Large Taxpayers
- Adjusts the fines and penalties
On Administration of Tax Incentives
- Grants DTI and NEDA as members of the Board of Investment Promotion Agencies (IPAs)
- BOI registered enterprises are required to install adequate accounting system and e-invoicing system
On Provisions on Availing of Fiscal Incentives by Existing Registered Enterprises
- Registered enterprise may continue to enjoy their incentives for two (2) years and may reapply for a five (5)-year incentive.
- Enterprises that avail of the ITH shall enjoy its incentives for the remaining period or five (5) years, whichever comes first.
- Those availing 5% GIT shall be allowed to continue for two (2) to five (5) years.
We will also send the specific tax highlights in our next week’s circulation.
II. TAX & BUSINESS-RELATED NEWS [SEPTEMBER 3-6]
- DoF: Tax perks should be reviewed every 2 yrs
- Dominguez wants biennial audit of tax perks to weed out undeserving firms
- Less restraints on foreign businesses sought
- Indonesian to gradually lower corporate income tax starting 2021
- Duterte won’t ban Pogos: Many will lose their jobs
- DoF: Late passage of 2020 budget ‘detrimental’ to PH
- Spare housing from VAT, says CREBA
DoF: Tax perks should be reviewed every 2 yrs [Manila Times, September 6, 2019]
FINANCE Secretary Carlos Dominguez 3rd is pushing for tax perks to be reviewed every two years as he reiterated that the Philippines had been too generous in granting incentives to select companies.
Dominguez wants biennial audit of tax perks to weed out undeserving firms [Philippine Daily Inquirer, September 5, 2019]
Tax incentives given to companies must be reviewed every two years as the Philippines has been too generous in giving away tax incentives to a select group of companies, the head of the Duterte administration’s economic team said on Tuesday.
Less restraints on foreign businesses sought [Philippine Daily Inquirer, September 5, 2019]
The House of Representatives has begun deliberations on a bill that would relax certain restraints on foreign investments.
Indonesian to gradually lower corporate income tax starting 2021 [Philippine Daily Inquirer, September 4, 2019]
The Indonesian government plans to gradually lower the corporate income tax in a bid to attract more investment and boost the country’s cooling economic growth.
Duterte won’t ban Pogos: Many will lose their jobs [Philippine Daily Inquirer, September 4, 2019]
Banning online gambling will affect the economy and thousands of workers in the country, President Rodrigo Duterte said Wednesday after China recently appealed for the Philippines to ban offshore gaming operations.
DoF: Late passage of 2020 budget ‘detrimental’ to PH [Manila Times, September 4, 2019]
THE Department of Finance (DoF) is urging lawmakers to pass the 2020 national budget after the government underspent by P178 billion in the first half of the year.
Spare housing from VAT, says CREBA [Manila Times, September 4, 2019]
The largest group of Philippine real estate and housing developers has appealed to Congress to shield housing purchases from the snares of looming value-added tax (VAT) imposition come 2021 even as it warned that doing so could imperil efforts to address the estimated 6.57 million housing backlog in the country.
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