The Philippines currently maintains the highest corporate income tax rate in Southeast Asia at 30%, substantially above regional averages of 20-25%. Singapore leads with 17%.
Proposed Changes Under SB 1357
For Domestic Corporations
The tax rate will drop from 30% to either:
- 25% for entities with taxable income exceeding ₱5 million
- 20% for qualified MSMEs with assets not exceeding ₱100 million (excluding land) AND taxable income not surpassing ₱5 million
The reduction includes retroactive implementation to July 2020.
For Foreign Corporations
The rate decreases from 30% to 25%.
Impact on Businesses
This reduction brings the Philippines closer to regional competitiveness and provides significant relief especially for micro, small, and medium enterprises that qualify for the lower 20% rate.
Stay tuned for Part 2, where we discuss the Minimum Corporate Income Tax (MCIT) changes.