The Tax Management Association of the Philippines (TMAP) is pushing for the lowering of the corporate income tax, from 30 percent at present to 25 percent, to allow Philippine industries to be more competitive with counterparts within the Asean.
With the expected passage by this year of the law that will lower income-tax rates for individuals, TMAP is also lobbying for Congress to scale back the corporate income tax in the country to a rate closer to the average corporate-tax rate within the Asean, which is 23 percent.
“A rate of 25 percent is a good starting point,” TMAP President Terence Bello said.
“This will put us in parity with the Asean because, right now, we have the highest corporate-tax rate,” he added.
Bello refuted the argument of the Department of Finance (DOF) that the lowering of the tax rate on corporate income and individual taxpayers will result in foregone revenues that will only adversely impact the economy.
On the contrary, Bello said for every peso of additional purchasing power given to individual taxpayers, 66 percent of the tax cut goes back to the economy in the form of higher consumption. With the increased consumption, the government also raises revenues through the collection of value-added taxes.
TMAP External Vice President Maria Lourdes Lim, meanwhile, said the reduced corporate income-tax rates would allow corporations to expand their business and generate even more employment.
Besides, Bello said, the foregone revenues used by the DOF as an argument for opposing the lowering of the tax rates are not proven by evidence, as the DOF has refused to provide data to Congress to substantiate its claim regarding foregone revenues if the tax rates are reduced.
TMAP proposed instead that the Bureau of Internal Revenue focus on collecting more from self-employed individuals to make up for the expected foregone revenues from the government as a result of the proposed reduction in the tax rates.
David Cagahastian