House panel chair opposes proposed gross tax scheme for corporations

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Metro Manila (CNN Philippines, September 18) — President Rodrigo Duterte's proposed shift to a gross taxation scheme for corporations might face opposition in the House of Representatives.

In a press briefing Wednesday, House committee on ways and means chairperson Representative Joey Salceda said that he'd prefer to work on improving the current corporate tax scheme.

"The current one, it's working. Let's just make it better. Just put good people... we just have to have a structural approach rather than shifting to gross income taxation," Salceda said.

He explained that a gross income taxation scheme might penalize companies whose expenses can not be deducted under the proposed measure.

"Yung high margin okay sila, yung low margin patay sila," Salceda said.

[Translation: Those with high income margins will be okay, but those with low income margins will suffer.]

President Rodrigo Duterte last week proposed a shift to gross taxation to curb corruption within the Bureau of Internal Revenue (BIR).

A gross income tax scheme would assess taxes against the income of a corporation.

Currently the government collects 30 percent net income tax from most local corporations.

According to the constitution, the move to change national tax laws must come from the House of Representatives.

The Department of Finance is currently studying Duterte's proposal.

"We need to study further what the President has advised," Finance Undersecretary Karl Chua said in the same press briefing.

READ: Economic team to study Duterte pitch for gross taxation

On curbing corruption in the Bureau of Customs, Salceda said they will study the Customs Brokers Act of 2004.

"We will study amending that law to ensure that the dysfunctional activities of some segments of the customs brokerage will not undermine the legitimate customs brokers," Salceda said.