Palace: Dropping special tax rate for RHQ staff for fair tax system

Malacañang on Saturday said President Rodrigo Duterte only wants a fair tax system with the removal of preferential tax rate for employees of multinational companies' regional headquarters (RHQs) and regional operating headquarters (ROHQs) in the Philippines.

"The President wants fairness in our tax system, particularly for individuals performing similar work," Presidential spokesperson Harry Roque said in as statement on Saturday.

"President Duterte’s veto message strongly disagrees with the current system that offers a reduced tax rate for qualified employees of Regional Headquarters and Regional Operating Headquarters (ROHQs), among others," Roque added.

Among the line items vetoed by Duterte in the recently-enacted Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law is the provision granting a reduced tax rate of 15 percent for employees of regional headquarters, regional operating headquarters, offshore banking units, and petroleum service

"To distinguish them from other similarly hard-working employees is in violation of the Equal Protection Clause of the Constitution," according to Roque.

"To further qualify present employees from future employees of ROHQ/OBU/Petroleum Service Contractor/Subcontractor is even more in violation of the clause."

Palace official made the statement amid the concerns raised by foreign chambers of commerce that the removal of the said tax perks on RHQ and ROHQ staff will result in reduction of operations and employment or relocation to other countries.

Roque, however, said that those enjoying the preferential rate are mostly managerial employees and those above them, including president/chief executive officers.

"Rank and file employees in the same company do not enjoy the same lower tax rate," he said.

"President Duterte’s veto ensures that tax payers are treated alike, and high ranking and highly paid employees in a company are taxed appropriately as others," he added. —John Ted Cordero/LBG, GMA News