By Monsi A. Serrano
With the approval of Corporate Income Tax and Incentives Reform Act (CITIRA) bill in the Senate, that aims to lower corporate income tax and streamline fiscal incentives, Department of Trade and Industry Secretary Ramon Lopez believes that this version of tax reform bill endorsed by the Senate Ways and Means Committee is a well-balanced approach to the corporate tax reform and helps remove the uncertainty of foreign investors.
In a text message sent by Secretary Lopez to THEPHILBIZNEWS, he said, “With the current bill filed, which addressed the concerns of several stakeholders, particularly on the need for a longer transition period and the one-stop nature of PEZA, we don’t expect foreign companies to pull out. It gives due recognition and more weight to investment performance and efficiencies.
Last February 19, Senator Pia Cayetano sponsored Senate Bill No. 1357 also known as the Corporate Income Tax and Incentives rationalization (CITIRA). Senator Cayetano, who heads the committee, is optimistic that the Senate would approve the bill on final reading by March 13.
“DTI would like to thank Senator Pia for sponsoring a bill that could create a better investment climate for the greater majority. We think that this is a well-balanced bill that enhances the incentives but will ensure investment performance and efficiencies, with a systematic way of rationalizing incentives,” said Sec. Lopez at a press conference.
“We appreciate this version of the bill, and we hope for the immediate passing of the bill to remove uncertainties and the wait-and-see attitude of investors. We are now pushing for the passage of the bill to resume the growth momentum of the country,” he added.
The CITIRA Bill, which seeks to lower income tax rate from 30% to 20%, and modernize the tax incentive system, is a priority bill of President Rodrigo R. Duterte.
In the past years, various foreign chambers of commerce in the Philippines expressed their concern about the incentives being given to them by the government which is planned to be removed. Their sentiment is that this would not attract investors in the Philippines as many neighboring countries in the ASEAN region are offering a lot better incentives.
The bill on rationalizing tax incentives was first proposed in 1995, the Department of Finance (DOF) and DTI have urged Congress to finally make this crucial reform happen.
“After a series of consultations and meetings with various members of the government, business community, and academe, and thorough consideration of the sensitivities of key stakeholders, the new bill offers a more reasonable transition period and one that gives recognition to high performing investments such as being 100% exportation, or 10,000 jobs created or being in a highly competitive footloose industries”, said the Trade Chief added.
Through the CITIRA, the Philippines’ corporate income tax rate will be gradually reduced from 30% to 20% over the next ten years, not far from the 17 to 25% of its neighboring ASEAN countries.
The bill prioritizes incentives of business activities that generate local employment, promote development, innovation, high technology projects, and agribusiness, as well as those that invest in less developed areas or communities recovering from disasters and conflicts.
The incentives provided will be in accordance with the principles based on international good practices to make it performance-based, targeted, time-bound, and transparent.