Second tranche of tax reform fails to pass Congress

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Metro Manila (CNN Philippines, June 3) — The second tranche of the administration's tax reform program lowering corporate income tax (CIT) rates to attract more investors, among others, has failed to hurdle Congress.

This, despite President Rodrigo Duterte's earlier call for the measure's swift passage.

The "Tax Reform for Attracting Better and High-quality Opportunities" (TRABAHO) bill, the second package of the government's "Comprehensive Tax Reform Program" next to the "Tax Reform Acceleration and Inclusion" (TRAIN) law, was passed by the House of Representatives in September last year.

However, its counterpart in the higher chamber--Senate Bill No. 1906 or the "Corporate Income Tax & Incentives Reform Act" filed by Senate President Vicente Sotto III--remained pending at the committee level.

Under TRABAHO bill, corporate income tax rate will be gradually lowered from 30 percent to 20 percent in ten years by reducing 2 percent annually starting 2021. World Bank data show the Philippines imposes one of the highest corporate tax rates in Asia.

It also seeks to modernize the incentives given to big businesses like tax holidays in order to attract more foreign investors.

The bill aims to repeal the National Internal Revenue Code exemptions on taxing government-owned and controlled corporations.

Some senators have been skeptical of the proposal since the TRAIN law was seen as among the main culprits behind inflation's rise of up to 6.7 percent in 2018. The TRAIN law lowered personal income taxes, but imposed excise taxes on fuel, luxury motor vehicles, and sweetened beverages.