The Philippines Department of Finance has said the country will look to install a 25 percent corporate income tax rate on a broader base as part of the second phase of its tax reform process.
Finance Undersecretary Karl Kendrick Chua explained that, presently, the country levies a 30 percent tax rate but it is applied across a narrow base, due to authorities granting tax breaks and concessions too extensively.
The Philippines imposes the highest corporate income tax (CIT) rate among Association of Southeast Asian Nations (ASEAN) but is among those at the bottom in terms of collection efficiency. “The Philippines,” he said, “currently imposes a CIT rate of 30 percent but with a tax collection efficiency of only 12.3 percent, while Thailand’s CIT rate is only 20 percent but it collects almost triple[…]”
“So clearly, we have the classic problem of a high rate but narrow base. That is why the efficiency is problematic,” Chua said.
Chua said the second stage of the Government’s tax reform progress will look to rationalize incentives to ensure these are “performance-based, targeted, time-bound, and transparent.”
