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Metro Manila (CNN Philippines, March 27) – The groups welcomed the enactment of a measure that will lower corporate income taxes and provide better tax incentives for some industries.
However, they also disagreed with President Rodrigo Duterte’s decision to veto, and not veto, some of its provisions.
The president signed this Friday the Law of Corporate Recovery and Tax Incentives for Companies or CREAR, one of the priority measures of the administration and its second tax reform package. Among its features is the reduction of corporate taxes from 30%, the highest in the ASEAN region, to 25% for large corporations and 20% for small and medium-sized companies that earn ₱ 5 million a year.
READ: CREATING Opportunities through Better Tax Incentives, Lower Corporate Taxes
However, Duterte vetoed nine provisions of the new law, saying “[w]We must keep the provisions of this reform reasonable and not redundant. “
In a statement, the Philippine Institute of Financial Executives thanked Duterte for finally passing the law that “will not only relieve our businesses of the pandemic but will improve the country’s competitiveness as an investment destination in the long term.”
However, the group said it disagrees with the president’s decision to veto some items, but did not specify them. He also urged the Internal Revenue Office to issue the implementing rules and regulations before the tax deadline in April.
Meanwhile, Action for Economic Reforms said that while it agrees with most vetoed parties, it questions why the president omitted the provision that exempts local oil refineries from paying taxes and duties on crude oil imports. Another section includes the crude oil refining industry in the Strategic Investment Priority Plan, which establishes the activities qualified to receive incentives.
“However, it is clear that one provision, that of protecting the local crude refinery, escaped the presidential veto when the same reasons for removing other weak provisions apply to this specific company,” AER said. “In other words, the protection granted to a local crude refinery is distorting, uncompetitive, unfair, rigid and redundant.”
This clearly shows that the government is protecting a company that is “objectively uncompetitive,” AER added, while noting that while the administration has the will to eliminate weak provisions, it “succumbed to the powerful lobby of one particular oligarch.” .
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