Imee: Stand-Alone Bill To Cut Corporate Tax Urgent
Senator Imee Marcos has urged both Houses of Congress to pass a stand-alone bill reducing corporate income tax by 5% to provide economic relief to businesses, minimize lay-offs, and attract foreign investment amid the COVID-19 pandemic.
Marcos, who chairs the Senate committee on economic affairs, said that such a bill has to be passed separately from the all-inclusive Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) before the June 5 recess.
“Export companies continue to protest against the removal of business incentives that have worked for them until now but are seen as revenue losses by the Department of Finance and the National Economic Development Authority,” Marcos explained.
“The problematic incentives can be worked out later in another law. We are all ready to work overtime to pass CREATE, but besides the reduction in corporate income tax and the extension of so-called sunset provisions for business incentives, where is the bill?” Marcos asked.
The immediate passage of a bill reducing corporate income tax will make foreign investors give the Philippines a second look, even as Vietnam, Thailand, and Indonesia are top priority because of their lower tax rates, Marcos said.
Marcos added that the government has been losing investment opportunities amid the pandemic, as Western countries reduce their dependence on China for a more secure supply of goods and search for cheaper suppliers to maintain their price levels and survive an economic recession worldwide.
“We must get some investment from that precious China fall-out, as well as the anticipated new outsourcing from a depressed world economy,” Marcos said.
“Also, we need to stem the fiscal mistakes causing our few loyal foreign investors to leave the Philippines,” Marcos added.
The Philippines has lost some $20 million, or more than Php1 billion, in export volumes in the past two months due to the transfer of foreign companies to neighboring countries with friendlier tax regimes.
More multinational corporations may decide to produce less and not expand their factories in the Philippines, eventually pulling out export volumes for elsewhere, “if we don’t pick up the pace of a world scrambling to keep economies afloat,” Marcos said.