MANILA, Philippines – The Philippine Chamber of Commerce and Industry (PCCI), the largest business organization in the country, has expressed concern over the differences in the treatment of taxes for corporate entities and sole proprietors in Congress.
PCCI is questioning House Bills 3927 and 3992, the twin measures being pushed in the lower house to simplify income taxation for corporations and individual taxpayers. This, the group said, would result in a higher income tax due for an individual compared to that of a corporation.
In a position paper submitted by PCCI to the House Committee on Way and Means, it stated that the proposals are unfair or biased against individual businessmen or professionals. In the proposed bills, a corporate business can claim bigger direct cost yet avail of a lower income tax rate of 18 percent while an individual taxpayer is allowed limited deductions, with tax rate as high as 32 percent.
Tammy Lipana, chairman of the Tax Committee of PCCI, indicated that under the proposed schemes, if a corporation does not opt for the 18 percent gross income tax, it shall be allowed to claim practically all its business-related expenses and other deductions allowed in determining its taxable income, whereas if a self-employed individual does not opt for the 40 percent Optional Standard Deduction, he will be allowed to claim only eight items of deductions.
At the same time, PCCI president Francis Chua affirmed that PCCI recommends the adoption of a tax system that is neutral to business in whatever form, whether it be in corporate form or as sole proprietorship.
“A tax system should not cause a distortion in the decisions of businessmen by encouraging businesses to incorporate,” he added. “The tax system for both corporations and individual taxpayers should be aligned so as to encourage more micro, small and medium entrepreneurs.” –Ma. Elisa P. Osorio (The Philippine Star)
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