Warning aired on global corporate tax impact on PH
A veteran solon reminded the Philippines that it should prepare for the consequences of the imposition of the Global Minimum Corporate Tax, which may require multinationals currently in the Philippines to pay a top-up tax in their countries of origin.
Albay Rep. Joey Salceda, chairman of the House committee on ways and means, made this call as he said that committee approved the substitute bill for the Corporate Recovery and Tax Incentives for Enterprises or CREATE Law amendments.
“We need to prepare for when countries accede to this regime,” Salceda said.
The global minimum tax is under the Organisation for Economic Co-operation and Development (OECD) Inclusive Framework on Base Erosion and Profit Shifting (BEPS).
The framework introduces a 15 percent global tax for multinational companies with at least EUR 750 million revenue.
“Major Philippine trade partners like Japan and Korea have already approved their legislation on the matter. So, it will already definitely affect us,” he added.
Among all ASEAN-6 economies, only the Philippines has not made significant progress in implementing the rules.
Those who are under the income tax holiday or special corporate income tax regime of 5 percent might be required to pay a top-up tax in their home countries.
“When that happens, our tax breaks will be quite ineffective in promoting foreign investments. So, we have to imagine new non-tax incentives such as infrastructure and market promotion that make doing business here easier and more profitable,” he said.
Salceda said that the amendments to the CREATE Law should thus consider how to evolve a tax incentive regime that complies with the global minimum tax but still attracts foreign investors.
He invited the Department of Finance and other stakeholders to propose amendments to the CREATE Law that will make the country’s tax incentives compliant with the global minimum tax scheme.
