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Philippine lawmakers approve corporate tax cuts
[MANILA] Philippine lawmakers backed a reduction in the corporate tax rate and removal of unnecessary tax incentives in a final vote on a key legislation, which the government says would attract investment and create much-needed jobs.
Voting 170 to eight with six abstentions, the lower house of Congress, dominated by President Rodrigo Duterte's allies, passed on the third and final reading on a bill that will slash the corporate income tax from 30 per cent, currently the highest in the region, to 20 per cent by 2029.
The bill is among the tax reform measures Mr Duterte is pushing to help fund his infrastructure programme and make the tax system fairer and simpler.
Cutting the corporate income tax rate would boost the Philippines' competitiveness, the government has said, and benefit the country's more than 90,000 micro, small and medium enterprises, which in 2017 employed close to 5 million people.
The bill, which must now go to the Senate, will also rationalise fiscal incentives to ensure that only qualified companies would be granted tax relief.
Congressman Joey Salceda, the bill's principal author, said the legislation, once passed into law, will create more than a million jobs and add 1.1 per cent to GDP growth in its first year of implementation. The bill, he said, is part of the country's "national response to the US-China trade war".
In 2017, the government forewent 441 billion Philippine pesos (S$11.6 billion) in revenues because of tax breaks deemed unnecessary or ineffective, the Department of Finance has said.
"Incentives are not entitlements, but privileges that must be earned," the Department of Finance said in a presentation to Congress last month.