Department of Finance’s proposal on tax reforms
"A simpler, fairer, and more efficient tax system is needed to promote investment, create jobs, and reduce poverty. Not reforming the tax system will deprive the poor of the necessary social services and infrastructure that can lift them out of poverty and make them more productive contributors to society."
Carlos G. Dominguez
Secretary of Finance
What is the
COMPREHENSIVE TAX REFORM?
The Comprehensive Tax Program (CTRP) is needed to accelerate poverty reduction and sustainably address inequality to attain the President's promise of tunay na pagbabago. By making the tax system simpler, fairer, and more efficient, additional and a more sustainable stream of revenues need to be generated to make meaningful investments on our people and infrastructure to achieve our vision for the Philippines.
The Vision of CTRP
The tax reform aims to achieve the following:
Package 1: TRAIN
Republic Act No. 10963 or Tax Reform for Acceleration and Inclusion (TRAIN) addresses several weaknesses of the current tax system by lowering and simplifying personal income taxes, simplifying estate and donor’s taxes, expanding the value-added tax (VAT) base, adjusting oil and automobile excise taxes, and introducing excise tax on sugar-sweetened beverages.
As a complimentary measure TRAIN, Congress introduced Package 1B or the Tax Amnesty Bill. Package 1B includes the lifting of bank secrecy laws and automatic exchange of information and three types of amnesties (on estate tax, all unpaid internal revenue taxes with the corresponding waiver of bank secrecy laws in the availment thereof, and delinquencies). There are also proposals on other amnesty taxes such as importation taxes and customs duties.
Package 2: TRABAHO
TRABAHO seeks to make the corporate tax system simpler, fairer, and more transparent. It will lower the corporate income tax (CIT) rate from 30% to 25% for a large majority of businesses and modernize fiscal incentives, so that these are given to investors who make positive contributions to society. This will correct some of the most glaring inequities and inefficiencies in our corporate tax system.
Package 2+: Mining and sin taxes
Package 2+ of the Comprehensive Tax Reform Program includes proposed reforms on mining and sin taxes. For mining, the proposal is to implement a single fiscal regime applicable to all mineral agreements to promote fairness. For sin taxes, Package 2+ proposes to further increase the excise tax on both alcohol and tobacco products to provide additional funding for Universal Health Care (UHC).
Package 3: Property valuation and taxes
Package 3 of the CTRP aims to introduce vital reforms to promote the development of a just, equitable, and efficient real property valuation system. The reforms will broaden the tax base used for property and property-related taxes of the national and local governments, thereby increasing government revenues without increasing the existing tax rates or devising new tax impositions.
Package 4: Capital income and financial taxes
Package 4 of the CTRP is about reforms on capital income and financial services taxation, which aims to make the taxation of the sector simpler, fairer, and more efficient. Specifically, it reviews the taxes imposed on financial intermediaries and the products they offer: on savings and investments; and debt and equity instruments.
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