The House of Representatives has approved on third and final reading the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) bill, the second package of the government’s comprehensive tax reform program, according to news reports.
In a report on September 10, Inquirer.net said 187 legislators voted to approve the said measure, 14 voted negatively while three abstained. The lower house of the congress approved the bill on second reading Tuesday, September 4.
One of the bill’s main features is its aim to lower the corporate income tax (CIT) from the current 30 percent to 20 percent in the next 11 years. The rate will be decreased every two years by two percentage points starting in 2021.
But to offset the expected government revenue losses, the bill also seeks to reduce incentives awarded to some companies, particularly multinational firms with local offices or factories.
According to a statement by the Department of Finance, almost 90,000 small and medium enterprises (SMEs) still pay the regular income tax while there are as many as 645 firms that continue to receive tax incentives for at least 15 years.
While critics say this may result in massive job losses as most foreign firms may be forced to relocate their businesses elsewhere, proponents argue that the bill may also encourage the growth of small and medium enterprises.
The proposed measure must first go through the Senate, where it faces a tough challenge as majority of senators are against its current form.
Overall, the Duterte administration is seeking to pass five more tax reform packages, including reforms on property taxes, investments and sin taxes. The first package of the program, the Tax Reform for Acceleration and Inclusion (TRAIN) law, which reduced personal income taxes, was signed into law in December 2017.
Elyssa Christine Lopez is a staff writer of Entrepreneur PH. Follow her on Twitter @elysalopz