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Philippines: Philexport supports cut in corporate income tax rate to 25%
MANILA, Philippines — The Philippine Exporters Confederation Inc. (Philexport) is supporting a proposal to immediately cut the corporate income tax (CIT) rate to 25 percent to help businesses weather the economic fallout of the coronavirus disease 2019 or COVID-19 pandemic.
Philexport president Sergio Ortiz-Luis Jr. said the group supports the immediate reduction of the CIT rate to 25 percent from 30 percent under the proposed Corporate Recovery and Tax Incentives of Enterprises Act (CREATE), a revised version of the Corporate Income Tax and Incentives Rationalization Act (CITIRA).
“The drop in CIT is expected to attract investors, increase the country’s competitiveness and help address the cash flow issue of micro, small and medium enterprises or MSMEs. But in this crisis, this tax reform will particularly be relevant especially to small and medium-sized businesses bleeding from the impacts of the lockdowns and COVID-19 pandemic,” Ortiz-Luis said.
During the Sulong Pilipinas event last week, Acting Socioeconomic Planning Secretary Karl Chua said the proposed immediate reduction in CIT rate to 25 percent starting July under CREATE is part of the government’s proposed recovery plan.
While CREATE seeks to drastically cut the CIT, the proposed CITIRA aims to gradually bring down the CIT to 20 percent over a 10-year period.
The CITIRA bill is among the measures pushed by Philexport under a new normal roadmap to help exporters, especially MSMEs, get back on their feet.
As part of the new normal roadmap, Philexport recommended the immediate reduction of the CIT and removal or reduction to 50 percent of the export threshold under the CITIRA so more companies could enjoy incentives.
Apart from CITIRA, Philexport is also pushing for the passage of the following measures: Philippine Economic Stimulus Act with amendments from the private sector to help fund assistance programs, Open Access in Data Transmission Act to help address broadband and connectivity issues, Magna Carta for MSMEs as amended to empower SB Corp. to lend more to MSMEs and facilitate other sources of funds and Customs Amnesty Act as possible revenue source for COVID-19 assistance programs under the new normal roadmap.
Philexport likewise called for effective implementation of Executive Order 114 or the Balik Probinsya Program to help decongest Metro Manila, as well as the National ID System to facilitate the social protection programs.
Ortiz-Luis said it is challenging to export at this time given the disruptions brought about by the pandemic in over 200 countries, including the country’s top trading partners.
As such, it is important for government to give immediate attention to exporters and MSMEs.
Ortiz-Luis said many of the export companies have either scaled down or totally shut down operations.
A survey conducted by Philexport showed 88.4 percent of MSMEs want to resume operations after the lifting of the enhanced community quarantine, but only at 50 percent of their capacity.
Based on the survey, MSMEs said they could only operate at full capacity if certain conditions are present such as mass testing for COVID-19 cases, establishment of quarantine facilities. provision of public transportation, availability of loan or financial assistance, smooth logistics operations, sufficient raw material supply and product demand.
The survey also showed 84 percent of respondents intend to apply for loans to support their operations, pay salaries and expand technological capacity.
Source: https://www.philstar.com/business/2020/05/18/2014686/philexport-supports-cut-corporate-income-tax-rate-25