The government is considering reducing individual and corporate income taxes to 25 percent in three years to attract more foreign investors.
Finance Secretary Carlos Dominguez 3rd said the government plans to reduce corporate income tax rates from 30 percent to 25 percent. It also wants to cut individual income tax rates from 32 percent to 25 percent.
“When foreign investors look at the Philippines, the first thing they look at is the headline [corporate]tax rates. Ours is right now at 30 percent and in other areas it is much less than that,” Dominguez said.
“Our plan is to reduce the tax rates over three years from 30 percent to 25 percent. Incidentally, we will do the same for individual income tax rates [for two or three years],” he added.
Dominguez explained that government will redo the tax tables for individual income tax which was formulated in 1997 whereby an individual earning P500,000 a year will have to pay 32 percent tax.
“We hope to be able to adjust it with inflation and the top tax rate will be much higher than the P500,000 a year,” he said.
“These were our plans and we have to go to the House of Representatives and the Senate… so we have a big fight coming along,” he added.
Lowering the income tax rate is part of the Duterte Administration’s 10-point economic agenda that seeks to make tax administration more progressive.
The government will also send a proposal to Congress to lower estate duty to six percent from the present five percent to 20 percent of the net asset a person leaves behind upon death and which his or her heirs will inherit.
Also included in the tax reform plan are measures to offset revenue loss that lower income tax may cause. Additional revenues will be sourced from the increase in excise tax on fuel and sweetened beverages.