MANILA: A joint Philippine congressional body passed a bill on Monday to lower the corporate tax rate to attract more foreign investment and help the coronavirus-hit Southeast Asian economy recover.
The bill, a key priority of President Rodrigo Duterte’s administration, will reduce the corporate tax rate for large companies from 30%, the highest in Southeast Asia, to 25% and for small businesses to 20% by 2029.
Congressman Joey Salceda, chairman of the bicameral committee, said reconciling the upper house and lower house versions of the law would remove investor uncertainty about the country’s financial regime.
“(It) will be like opening the floodgates on investment,” Salceda said in a statement.
The bill will also streamline incentives for investors to clean up over 300 billion pesos ($ 6.24 billion) of spills resulting from tax breaks and other perks that are constantly given to investors.
Salceda said the tax reform measure will create 1.8 million jobs over the next decade and result in tax savings of pesos 931 billion for businesses.
Salceda said the bill will also allow duty-free imports of COVID-19 vaccines, which are expected to arrive this month.
Although the Philippines was one of Asia’s fastest growing economies prior to the pandemic, foreign ownership restrictions, high electricity costs, and poor infrastructure make it lag behind regional competitors when it comes to attracting FDI.
Some lawmakers, including Duterte’s allies, have proposed changes to the economic provisions of the Philippine Constitution to liberalize investment rules. – Reuters