DTI chief: Chances dim of seeing Congress pass ‘trabaho’ bill by June
January 10, 2019 at 08:00
DTI chief: Chances dim of seeing Congress pass ‘trabaho’ bill by June
In this file photo taken in 2018, workers do their job at a semiconductor manufacturing facility at the Santa Rosa, Laguna Economic Zone.
It will be difficult to slip the second tax-reform package past the Senate before the 17th Congress ends in June, the country’s trade chief has conceded.
Trade Secretary Ramon M. Lopez admitted time is not on the government’s side in getting the Tax Reform for Attracting Better and High-Quality Opportunities or Trabaho bill, as it has been dubbed by the House of Representatives, approved before the 17th Congress bows out. The government is having a tough time sailing the measure across the
Senate largely due to its component on rationalizing tax incentives.
“[I’m] not too confident on thatone due to limited time and [the] election period,” Lopez told the BusinessMirror. Besides the election period distracting legislators, many of whom will be seeking reelection or running for other positions, Congress still has to pass the 2019 national budget.
The Trabaho bill—the second package of the government’s tax-reform program—will gradually reduce corporate-income tax (CIT) to 20 percent in 2029, from 30 percent. It will, in exchange, overhaul incentives granted to firms in economic zones.
Locators, mostly multinationals, said they might trim down manpower or move out of the country if their incentives, particularly the 5-percent tax on gross income earned (GIE) in lieu of all local and national taxes, are removed.
House Bill 8083, the version of the measure approved by the House of Representatives in September, limited the period of income-tax holiday (ITH) to three years and additional incentive to two years. Firms enjoying the GIE, on the other hand, are given up to five years to relinquish the incentive.
“Based on investors’ feedback, they need a longer transition period, performance- based incentives on quality investments [and] they can be open to higher GIE as long as it continues or [is maintained] longer but still time-bound,” Lopez said.
Even Maria Alegria Sibal-Limjoco, president of the Philippine Chamber of Commerce and Industry, is uncertain about the fate of the Trabaho bill. In spite of this, she urged senators to approve the measure primarily, because of its component on reducing CIT.
“We are not sure [if it will be passed], but as a whole or the big picture, it should be [because] it is good for our country,” Limjoco said in a text message to the BusinessMirror.
Without relating to the Trabaho bill, Canadian Chamber of Commerce of the Philippines President and CEO Julian H. Payne said legislators must prioritize trimming down the country’s CIT rate to keep it on a par with Southeast Asian competitors.
Canadian firms will appreciate the “expeditious legislative approval for a reduction in corporate income-tax rates with stepped annual reductions down to a level of 20 percent so the Philippines’s CIT is competitive” with those of its Southeast Asian neighbors, Payne told the BusinessMirror. The Philippines imposes the highest CIT in the region.
Source: https://businessmirror.com.ph/dti-chief-chances-dim-of-seeing-congress-pass-trabaho-bill-by-june/
