According to a release from the Philippines Department of Finance, the House Ways and Means Committee has approved the Corporate Income Tax and Incentive Rationalization Act (CITIRA) Bill, which includes favorable measures on corporate income tax rate and fiscal incentive regime. The corporate tax reforms are as enacted as part of the second package of the government’s comprehensive tax reform program.
Reduce rate of corporate income tax
One of the main measures is for a reduction of the corporate income tax (CIT) rate. Under the committee-approved Bill, the current 30% rate would be reduced by 2% every two years starting in 2021, until reaching a rate of 20% in 2029. Further more, the government also issued tax package and reduce the tax on interest income, peso deposits and investments, and harmonizes capital income tax rates for dollar deposits and investments, dividends or equity.
Fiscal incentive regime
Also, measures are included to amend the fiscal incentives regime, which according to the release will be performance-based, time-bound, targeted, and made more transparent under the CITIRA Bill. This includes that incentives will be granted based on the number and quality of jobs that will be created, the investments made in Research and Development (R&D) and skills training, and the capital invested for countrywide infrastructure development, among other criteria. Incentives for approved activities will also be given for a specific period, which may be renewed if meeting approved criteria.
For taxpayers, currently enjoying incentives under the existing regime, a sunset provision is included. After the end of the sunset period, taxpayers may reapply for the new incentives if meeting the criteria.
Source: The Philippine Government