Government losses could reach P667 billion between 2020 and 2027 due to the reduction in corporate income tax (CIT), according to the Department of Finance (DoF).
Finance Assistant Secretary Antonio Joselito Lambino II reported that revenue losses could reach P625 billion within the next five years, plus P42 billion in the second half of 2020.
The estimate excludes projections for 2026 and 2027, when CIT is expected to further decrease.
“(The CIT) is the largest stimulus package through corporate tax reform in the country’s history,” Lambino said.
Meanwhile, Socioeconomic Planning Secretary Karl Kendrick T. Chua said the government intends to reduce the CIT to 20% by 2027.
Chua told members of the House of Representatives the CIT will be reduced to 25% from the current 30%, for implementation by July 2020, as part of the Corporate Income Tax and Incentives Rationalization Act (Citira).
Lambino said after the reduction in CIT this year, the tax will be reduced by one percentage point annually between 2023 and 2027.
“The reform will put more money in the hands of businesses to support their employees and reinvigorate their operations post ECQ”, Lambino said.
Chua said the repackaged tax incentives will include an across-the-board lower tax rate for all firms and enhanced net operating loss carry-over.
The immediate lowering to 25% from the current 30% will have a revenue impact of P226.8 billion.
Chua said the tax incentives will also support the Balik Probinsya, Bagong Pag-asa Programs.
The Fiscal Incentives Review Board is tasked to improve the governance of tax incentives by tailoring programs to the individual companies’ needs, Chua said.