DOF proposes 5% cut in corporate income tax

The Department of Finance (DOF) proposed to cut corporate income tax (CIT) from 30% to 25% starting July, aiming to provide businesses with ₱667 billion in stimulus.

This initial reduction is expected to save companies ₱42 billion in the second half of 2020, helping them retain employees and revive operations post-enhanced community quarantine.

The government views this measure as the largest stimulus package through corporate tax reform in the Philippines' history.

The DOF plans to further reduce the CIT rate by one percentage point annually from 2023 to 2027, eventually reaching 20%.

The proposed CREATE bill also includes extending net operating loss carryover from three to five years and allowing losses incurred this year to be credited against future tax payments.

Existing investors may retain their current tax incentives for four to nine years, while new incentives will be targeted and tailored to attract specific investments.

The grant of incentives under the CREATE bill will be performance-based, targeted, time-bound, and transparent, governed by the Fiscal Incentives Review Board (FIRB).