METRO MANILA (July 24, 2018) – The President is hopeful that the passage of the second package of the Comprehensive Tax Reform Program (CTRP) by the end of 2018 will benefit the micro, small and medium enterprises (MSMEs) in the country.
The CTRP aims to reduce corporate income tax (CIT) rates and modernize fiscal incentives to investors. The MSMEs accounts for 99 percent of entities in the country and employs about 65 percent of workers.
Package 1 of the CTRP, also known as the Tax Reform for Acceleration and Inclusion Act (TRAIN), was signed into law last Dec. 19. It slashed personal income tax rates–the first time that the government did so by law–while raising additional revenues for infrastructure and social services through the repeal of several non-essential exemptions to the value-added tax (VAT); adjustments in the excise tax rates for fuel, coal and automobiles; and a tax on sugar-sweetened beverages among other measures.
The CTRP’s Package 2 was designed to be revenue-neutral, proposes to gradually lower the CIT rate from 30 to 25 percent while modernizing incentives for companies to make these “performance-based, targeted, time-bound, and transparent.”
Through the reform package, government would be able to ensure that incentives granted to businesses generate jobs, stimulate the economy in the countryside and promote research and development.
The President said lowering of taxes for businesses will allow MSMEs to have higher capital and employ more people. “There is no chance we can deliver our promises without an equitable tax system,” he added.