DOF claims corporate income tax reform bill to create 1.4-M jobs

The Department of Finance (DOF) on Wednesday projected that around 1.4 million jobs will be created between 2021 and 2029, once a bill pushing for lower corporate income tax is passed into law.

The second comprehensive tax reform package (CTRP), now pending in the Congress, aims to reduce the 30 percent corporate income tax (CIT) to 20 percent by 2029.

Under the proposed bill, the CIT will be lowered by 2 percentage points every two years starting 2021 until 2029.

DOF explained that lower CIT will free up more capital for firms and enable them to invest and hire workers.

“This tax reform, once approved by the Congress and enacted into law, will create an estimated 113,944 jobs in 2021 all the way up to 1.4 million in 2029,” Finance Assistant Secretary Antonio Joselito Lambino II said in  a statement.

The bill also aims to rationalize the incentives enjoyed only by the top 1,000 private corporations in the country, and level the playing field for the small-and-medium enterprises (SMEs), which employs around 33 percent of the labor force, Lambino noted.

“Some 90,000 small-and-medium enterprises (SMEs), and some of the hundreds of thousands more micro-enterprises have to pay the steep rate of 30 percent under the convoluted corporate tax system that has not been changed for over two decades now,” according to the DOF.

During his third State of the Nation Address on July 20, President Rodrigo Duterte called on both the Senate and the House of Representatives to pass the remaining CTRP packages before the end of 2018

With a vote of 187 in the affirmative, 14 negative and three abstentions, the House of Representatives has approved its version of the tax reform known as House Bill 8083, or the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) bill on September 10.

The Senate, at the committee level, is still discussing its version dubbed as the Corporate Income Tax and Incentives Reform Act, which was authored by Senate President Vicente Sotto III. —Dona Magsino/VDS, GMA News