SEVENTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES 
)
F irs t R egular Session 
)
SENATE
Senate Bill No.
125
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RECEIVED
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Introduced by Senator Juan Miguel F. Zubiri
AN ACT REDUCING THE CORPORATE INCOME TAX RATE, AMENDING 
SECTIONS 27 AND 28 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, 
AS AMENDED, AND FOR OTHER PURPOSES
EXPLANATORY NOTE
W ith  th e  ASEAN E co n o m ic In te g ra tio n  so o n  to  ta k e  e ffe c t, it  is tim e ly  fo r th e  P h ilip p in e s  
to  re v is it a n d  m a k e  c h a n g e s to  its  c o rp o ra te  a n d  in c o m e  ta x  s tru c tu re s . In  th e  ASEAN re g io n , 
th e  P h ilip p in e s has th e  h ig h e s t c o rp o ra te  ta x  a t 3 0  p e rc e n t, fo llo w e d  b y  In d o n e s ia  w ith  25 
p e rc e n t, T h a ila n d  w ith  23 p e rc e n t; V ie tn a m  w ith  2 2  p e rc e n t a n d  C a m b o d ia  w ith  2 0  p e rc e n t. 
S in g a p o re  le vie s th e  lo w e s t ra te  o f 17 p e rc e n t a n d  a ttra c ts  th e  m o s t fo re ig n  d ire c t in v e s tm e n ts  
(E D I). A nd  it is no s u rp ris e  th a t th e  P h ilip p in e s , w ith  th e  h ig h e s t ta x  ra te , re c e iv e s  th e  le a s t EDI 
a m o n g  its  ASEAN n e ig h b o rs .
I f  w e  in te n d  to  c o m p e te  in th e  "s in g le  m a rk e t a n d  p ro d u c tio n  b a s e " in th e  ASEAN re g io n , 
it is im p e ra tiv e  th a t w e  a d o p t m e a s u re s  to  m a k e  th e  P h ilip p in e s  e c o n o m y  a t p a r w ith  its  
n e ig h b o rs  as a ch o ic e  lo c a tio n  fo r  fo re ig n  in v e s to rs . In  a d d itio n  to  a d d re s s in g  in a d e q u a te  
in fra s tru c tu re , b u re a u c ra tic  in e ffic ie n c ie s , h ig h  c o s t o f p o w e r a n d  c o rru p tio n , th e  P h ilip p in e  
g o v e rn m e n t can p u sh  fo r c o m p e titiv e  ta x  ra te s  fo r b u sin e sse s in th e  c o u n try  to  a ttra c t th e  e n try  
o f n e w  in v e s to rs  a n d  e n c o u ra g e  th e  e x p a n s io n  o f e x is tin g  o n e s.
In  
a 
re c e n t 
s tu d y  
p re s e n te d  
b y  
C o m m is s io n e r 
S tella  
Q u im b o  
o f th e  
P h ilip p in e  
C o m p e titio n  C o m m issio n , it w o u ld  a p p e a r th a t a n y  re d u c tio n  in c o rp o ra te  in c o m e  ta x  w ill m o s t 
lik e ly  re s u lt in in cre a se d  in v e s tm e n ts . 
Based o n  h e r re s e a rc h , a o n e -p e rc e n ta g e  p o in t re d u c tio n  
in c o rp o ra te  in c o m e  ta x  w o u ld  tra n s la te  to  m o re  in v e s tm e n ts  ra n g in g  fro m  6 .1  p e rc e n t to  7.9 
p e rc e n t, o r fro m  P31 b illio n  to  P33 b illio n . S he fu rth e r sa id  th a t h ig h  ta x  ra te s  d o  n o t n e c e s s a rily  
tra n s la te  in to  h ig h e r re v e n u e  c o lle c tio n s .
In  v ie w  o f th e  fo re g o in g , th is  b ill se e ks to  re d u c e  th e  c o rp o ra te  in c o m e  ta x  ra te s  to  be 
im p le m e n te d  b y J a n u a ry  1, 2 0 1 8  to  b rin g  th e  c o rp o ra te  in c o m e  ta x  ra te  to  25  p e rc e n t fro m  th e  
p re s e n t 3 0  p e rc e n t.
A n y  fo re g o n e  re v e n u e  as a co n s e q u e n c e  o f th e  re d u c tio n  o f th e  c o rp o ra te  in c o m e  ta x  
ra te  
w ill 
be 
o ffs e t 
b y  
th e  
p ro je c te d  
in cre a se  
in 
e c o n o m ic  
a c tiv itie s  
a n d  
e m p lo y m e n t 
o p p o rtu n itie s  a ris in g  fro m  in cre a se  in in v e s tm e n ts . M o re o ver, an  e x p a n s io n  o f th e  ta x  base as a 
re s u lt o f th is  m e a s u re  m a y  b o d e  w e ll fo r in cre a se d  re v e n u e  c o lle c tio n s  in th e  lo n g  te rm .
T h e  im m e d ia te  a p p ro v a l o f th is  b ill is th e re fo re  e a rn e s tly  s o u g h t.
IAN MIGUEL F. ZUBIRI