MANILA -- The Department of Finance on Tuesday branded the proposed second package of the Duterte administration’s Tax Reform for Acceleration and Inclusion program or TRAIN 2 as "pro-business, pro-investments, and pro-incentives."
During a congressional hearing on TRAIN 2, Finance Secretary Carlos Dominguez III said the second tax reform package aims to build a "more competitive" and "transparent" business environment.
He said TRAIN 2 seeks to rationalize fiscal incentives to reduce overlaps, hidden subsidies that benefit a few, and loopholes that unfairly distribute business advantages. "We seek reforms that will deliver a more even playing field, simplify collection procedures, bring greater transparency and reward genuine efficiency," Dominguez said.
He added that while the second package recognizes the crucial role fiscal incentives play in attracting "efficiency-seeking investments", it shall require that every incentive granted must benefit the society in the form of better jobs, faster innovation, and countryside development.
Dominguez said the Philippines has the highest corporate income tax rate in the Association of Southeast Asian Nations (ASEAN) region. "We need to gradually bring down our corporate tax rate to the regional benchmarks," he said. TRAIN 2 seeks to lower corporate income tax rates paid by some 95 percent of businesses, while modernizing the fiscal incentives system.
Dominguez said the DOF also proposes replacing the 5 percent gross income earned (GIE) tax in lieu of all taxes with a 15 percent rate on net taxable income. DOF also proposed that value-added tax (VAT) be treated purely as a consumption tax in accordance with international best practices.
"In practice, this means when you buy, you pay; when you export, you claim a refund. VAT should never be used as an investment incentive," Dominguez added. (PNA)
