By Kris Crismundo/PNA
MANILA — The European Chamber of Commerce of the Philippines (ECCP) has asked the government to accelerate the reduction of corporate income tax (CIT) rates to make the country more attractive to European companies.
In a media round table Wednesday, ECCP President Nabil Francis said the business group supports the administration’s move to cut CIT rates, but recommends that it be done as soon as possible, to a level that can compete with the CIT extended by Southeast Asian neighbors.
Francis noted the Tax Reform for Attracting Better and Higher Quality Opportunities (TRABAHO) Bill, or the second package of the government’s Comprehensive Tax Reform Program, is one the advocacy priorities of the ECCP for 2019.
Under the TRABAHO Bill, the government targets to gradually cut CIT rate from the current 30 percent to 20 percent in a span of 10 years, while rationalizing fiscal incentives it provides to investors.
“The sooner, the better. Let’s try to go to 20 (percent) as (soon as) possible,” Francis said.
“The government is taking the right direction. We are supporting any kind of liberalization of the economy and making it more attractive for foreign investors,” he added.
While lowering the tax rate for enterprises, the ECCP is also in favor that the current incentives regime will remain.
“Incentives — this is important, and our recommendation would be incentives are staying. That’s really important. That is crucial. Keep those incentives in order to continue to promote the prosperous economy,” Francis said.
This was also echoed by ECCP Executive Director Florian Gottein, who said other countries in the region are providing more incentives for investors even though their tax rates are already low and their infrastructures are efficient.
Gottein cited that Singapore and Malaysia set CIT rates of 17 percent and 24 percent, respectively. They also have competitive infrastructure and energy prices, but these countries can still give investors generous tax perks.
“When it comes to infrastructure and energy prices, they are more attractive for investments. They gave away more and attractive incentives. So why we are cutting down incentives in the Philippines when we haven’t reached that level of infrastructure,” Gottein said, stressing that incentives are normally given to compensate for the lack of other factors in the business environment.
He added that the government should focus on efficient and effective tax collection rather than coming up with new taxes to support its infrastructure program.