May 29, 2018 – AmCham Philippines published its position paper on TRAIN 2 (Corporate Income Tax and Incentive Reform Act)
Download the complete 38-page paper here:
In brief, AmCham:
On Corporate Income Tax…
supports the proposed 25% CIT but would prefer 20%
- supports a faster rate of reduction of the CIT
- does not support the 0.15% of GDP formula of DOF/DTI
- suggests the Congress consider making a rate reductions could instead be linked to positive macroeconomic indicators
- suggests that Congress may wish to consider passing the CIT reform separately from FIR
- support the tax collection efficiency measures in the bills, such as requirements for the use of electronic receipts and electronic filing.
On Fiscal Incentives…
- views that the proposed bill creates uncertainty for existing and new investors.
- sees that the proposed bill degrades PEZA and special economic zones.
- believes that TIMTA data should not include customs duties and VAT for exporters.
- sees that the cost/benefit analysis is absent.
- believes that the GPH conclusion that exports are low despite the FI granted is inaccurate
reports that industry roadmaps may need reconsideration.
prefers that Status Quo for Fiscal Incentives should be retained
believes that the incentive package should be harmonized for all IPAs.
on the proposed four principles for fiscal incentives:
- Performance-based – AmCham supports measuring performance of businesses granted incentives.
- Targeted – AmCham supports and encourages the government to closely consult with investors on composition of the target list.
- Time-bound – AmCham recommends grandfathering for existing efficiency-seeking investors.
- Transparent – AmCham supports.
sees that the definition of export enterprise as exporting 90% of its products or sales is too restrictive. Exemption from the VAT and customs duties on imported capital equipment, machinery, raw materials, and spare parts used in the manufacturing process and intermediate goods should be granted as long as an enterprise continues to export.
suggests insertion of language to allow an additional deduction to encourage firms to train outside their employee base and thereby increase the skills of more Filipinos.
recommends a provision on Deduction for reinvestment allowance to manufacturing industry. VAT zero-rating should be maintained.
believes that the excemption from local taxes should be maintained.
believes that the DOF veto creates uncertainty and may be a conflict of interest.