Members listen as USec. Karl Chua discusses the TRAIN 2 Package.
January 23, 2018 – AmCham hosted a consultation on the second package of Tax Reform for Acceleration and Inclusion (TRAIN) at the Asian Institute of Management. The said forum was led by a presentation from the Department of Finance (DOF) Undersecretary Karl Kendrick Chua and the Department of Trade and Industry Undersecretary Ceferino Rodolfo.
Undersecretary Chua’s talk focused on the background of package 2 and its rationale (cost and benefits).
According to Chua, TRAIN Package 2 aims to lower corporate income taxes (CIT) and rationalize fiscal incentives in a bid to complement the expected revenues from the first package.
He further notes that the Philippines, despite having the highest rate of CIT in the ASEAN region, is not quite efficient in terms of revenue.
As with the tax incentives, the Philippines suffers from a complex system with 143 value-added tax (VAT) exemptions, 123 investment incentive laws, and almost 200 non-investment incentive laws.
Meanwhile, DTI Undersecretary Rodolfo discussed the implementation of the proposed regime. According to him, beginning Jan 1, 2020, the CIT rate will be reduced by 1 percentage point for every 0.15 percent of GDP reduction of investment tax incentives two years ago. The goal is to reduce the CIT rate from 30% to 25% by 2022, while expanding the tax base by 0.75 percent of GDP.
He further presented the following general principles of the proposed incentives reform:
The above mentioned conditions shall also be the basis for new investments that will avail tax incentives.
The proposed reform also seeks to:
• Expand the functions of Fiscal Incentives Review Board
• Broaden the tax base
• Rationalize investment tax incentives
• Introduce an incentives menu
The presentation was followed by a reaction panel led by the President of Semiconductor and Electronics Industries of the Philippines Inc. (SEIPI) Mr. Dan Lachica, and AmCham's Tax Committee
Chairman Atty. Jules Riego.
The session ended with an open forum moderated by AmCham Legislative Committee Chairman Mr. John Forbes.
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