THE Philippines and Japan have reaffirmed their commitment to further build on their strong economic partnership, which includes plans to expand Japanese investments in the country following favorable developments on a Philippine tax reform measure that aims to significantly lower the corporate income tax (CIT) rate.
Newly designated Japan Ambassador to the Philippines Koshikawa Kazuhiko said during a recent courtesy call on Finance Secretary Carlos Dominguez III that Japanese companies are exploring ways of realigning their supply chains to other countries like the Philippines.
Koshikawa said the approval by the Senate of the Corporate Recovery and Tax Incentives for Enterprises (Create) bill, earlier passed by the House of Representatives, was welcomed by Japanese investors doing business in the Philippines.
The Senate measure aims to lower the CIT for micro, small, and medium enterprises (MSMEs) with a net taxable income of P5 million and below to 20 percent, while other companies, including foreign firms, will pay a harmonized rate of 25 percent.
The current CIT, which is the region’s highest, is 30 percent.
During the meeting with Dominguez, Koshikawa also commended the Philippine economic team for its sound fiscal management of the economy amid the Covid-19 pandemic.
He also restated Japan’s continuing support for the Philippine government’s efforts to curb the spread of the virus and recover from the economic repercussions of the crisis.
Citing the signing in September between the two countries of the 50-billion yen Post-Disaster Standby Loan (PDSL) Phase 2, the ambassador reaffirmed Japan’s commitment to continue assisting the Philippines in its disaster risk reduction and mitigation programs.
Dominguez, for his part, thanked Japan for responding swiftly to the government’s call for emergency financing to help mitigate the impact of the pandemic on the economy and the Filipino people.
Japan is the country’s no.1 official development assistance (ODA) partner, with loans and grants amounting to around US$10.10 billion (38.53 percent of total ODA) as of June 2020.
Since the start of the Duterte administration in July 2016, 15 loan agreements totaling JPY679.296 billion (about P313.147 billion or US$6.443 billion) have been signed by Manila with Tokyo.
Before beginning his tour of duty in Manila, Ambassador Koshikawa was a senior official at the Japan International Cooperation Agency, and had served as Japan’s Ambassador to Spain and Angola. (PR)